Seven arrested on suspicion of fraud at housing charity

The Charity Commission has appointed an interim manager at a Birmingham charitable housing association after seven of its staff were arrested on suspicion of fraud.

The commission has also launched a formal enquiry into governance and financial controls at Astonbrook Housing Association, which has contracts with the Home Office and Birmingham City Council to provide temporary accommodation for asylum seekers.

Mohammed Arwo, chief executive of the charity, was among the arrested employees. A statement from West Midlands Police said they had all been bailed until a later date.

An anonymous source at the charity claimed that interim management personnel, provided by auditors Baker Tilly, were costing the charity about £40,000 a day, threatening it with bankruptcy. Neither the Charity Commission nor Baker Tilly would not comment on the cost of the interim manager. But a spokesman for the Charity Commission did confirm that the fee would have to be borne by the charity and that there was no facility for it to be refunded even if the investigation concluded that no fraud had been committed.

“Appointing an interim manager is quite a serious step to take and is not something we rush into,” said the spokesman. “We were satisfied in this case that there was some basis to the concerns raised, and the only appropriate measure was to put in an interim manager as a temporary measure to protect the charity’s assets, as well as the reputation of charities generally.”

He said the interim management team would have left immediately if they had felt they were unnecessary. “The fact that they are still there and didn’t pull out after an hour supports our judgment that an interim manager was appropriate,” he said. “They are not there to make as much money as possible.”

Astonbrook Housing Association won a five-year Home Office contract in March last year to provide housing for asylum seekers in a number of regions. All of its accounts since it was registered in 2002 are listed as overdue on the Charity Commission’s website. The site also states that the commission has no valid trustee details for the charity.

The Home Office confirmed that the Border and Immigration Agency was “working closely with other agencies on the investigation into this matter” but said the ongoing legal proceedings made it impossible to comment further. Birmingham City Council and Baker Tilly declined to comment.

An anonymous source at Astonbrook Housing Association said a gagging clause in Home Office contracts prevented her from speaking on the record.

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