The Charity Commission has criticised the former trustees of the defunct equality charity Awema, saying they lacked oversight of the charity finances and staff complaints and failed to manage conflicts of interest.
The All Wales Ethnic Minority Association attracted media attention in 2012 after the Welsh government, which had provided more than £7m of funding to the charity, found "significant and fundamental" failures in its governance.
The charity closed down shortly after and its former chief executive, Nasir Malik, was subsequently tried and later acquitted at Swansea Crown Court of two counts of false representation, with a third charge dropped after the jury failed to reach a verdict.
The commission has today published its report into its statutory inquiry into the charity, which was opened in 2012 but delayed because of the criminal proceedings against Malik.
The report says the regulator found a catalogue of errors by trustees, including a failure to provide adequate oversight of the charity’s finances, including staff expenses, insufficient management of conflicts of interest and a failure to properly deal with staff complaints.
The commission’s report said that Awema's chief executive made numerous expenses claims for significant amounts, including paying for a deluxe room in a hotel for him and his wife while on a business trip, buying tickets for sporting events to reward volunteers and using the charity’s funds to pay a parking fine he had incurred.
The chief executive also issued himself with a cheque for £9,340 to clear expenses claimed on his credit card, including £5,000 of advance expense payments.
"When interviewed for the inquiry, it was also acknowledged by the chief executive that the trustees were never consulted and therefore had no oversight of or input into the decision to authorise this claim for significant advance expenses," the report says.
"Two trustees admitted to the inquiry that they had no knowledge about how the chief executive's expenses were administered."
The regulator found that Malik's daughter was appointed to a role within the charity and swiftly promoted to operations director, receiving a £30,000 salary increase over three years. Trustees failed to manage the potential conflict of interest that arose from this situation, the commission concluded.
The report also says that a staff member who had made an allegation of misconduct against Malik was suspended and sacked two days later following a decision made by three of the charity’s trustees.
This staff member subsequently won a claim at an employment tribunal for harassment and victimisation, although a claim for unlawful dismissal was withdrawn because the charity had gone into liquidation.
In its judgement, the employment tribunal described the charity’s internal investigation of the staff member’s allegations as ‘a sham’, the commission’s report says.
In June 2014, five of the charity’s former trustees were disqualified from taking company director roles, the commission’s report says.
"The inquiry concluded that the trustees failed to act in the charity’s best interests and had little or no oversight of the charity’s management," the commission said in a statement.
"Trustee meetings were held at irregular and infrequent intervals, and there were inadequate reporting arrangements. This ultimately resulted in insufficient oversight of the management of the charity, and resulted in the actions of senior staff members not being properly supervised or scrutinised on key matters, including in matters where potential conflicts of interest existed."
The charity was removed from the commission's register in 2014 because it had ceased to exist.