The former trustee of an aid charity has been banned from acting as a company director or charity trustee for 12 years by the Department for Business, Innovation and Skills, after it was found he and his family had received more than £150,000 in unauthorised private benefit from the charity.
A report on the Charity Commission’s statutory inquiry into the now-defunct charity Helping Hands for the Needy – which eventually triggered the BIS investigation and disqualification – has been published today.
It says that after concerns were raised by a member of the public about financial mismanagement at the charity, the commission opened a regulatory compliance case into it in 2009. This was escalated to a statutory inquiry in 2010.
Several trustees of the charity, whose most-recently filed accounts with the regulator show that it had an income of £376,133 in 2008/09, had resigned before the case was opened in 2009, and another resigned before the inquiry was opened, leaving two remaining trustees; Mohammed Ashfaq and Syed Mohammed Zafar Iqbal.
The inquiry found Ashfaq had sole control of the charity’s bank account and that none of the former trustees had had any oversight of the charity’s expenditure at Ashfaq’s hands. The commission found evidence that Ashfaq and his family received substantial amounts of unauthorised private benefit from the charity, including payments in the region of £134,000 to companies connected to Ashfaq and the family, payments totalling £14,854 for building work on his private residence, £9,000 for parking and speeding fines and other costs for running his car.
The commission also came across issues including inadequate record keeping in relation to the charity’s overseas projects and use of restricted funds, no evidence of regular trustee board meetings, and a failure to submit annual documents to the commission.
Ashfaq resigned as a trustee 12 days after the commission opened the statutory inquiry, meaning the commission was unable to disqualify him as a trustee.
The charity, which was registered by the commission in 2002, went into voluntary liquidation in March 2011, and legal action to recover funds from Ashfaq by the liquidator is ongoing. The commission had initially intended not to publish a report on the case until these proceedings had concluded, but the report says these are taking longer than expected. The commission will publish a supplementary report when they are complete.
In 2013, following a referral from the liquidator to BIS and subsequent investigation by the department, Ashfaq was disqualified from being a company director for a period of 12 years, and Iqbal for five years. Both bans also mean that they cannot be charity trustees in this time.
The commission’s report says that extensive information about the case was reported to the Metropolitan Police, who have since decided to take no action.
Michelle Russell, director of investigations, monitoring and enforcement at the commission, said: "This is another case where our powers were not adequate, as the individual concerned resigned before we were able to remove him from his position. We were really pleased to work with BIS and provide evidence to support the action it took, which ultimately disqualified two of the trustees as company directors."