Animal rescue charity trustees used £200,000 donation to pay off personal loan

Two married former trustees at an animal rescue charity used a £200,000 donation to pay off part of a loan they obtained to buy a detached house and up to 40 acres of land, a Charity Commission inquiry has found.

The regulator opened an investigation into The Retreat Animal Rescue after placing it into a double defaulter class inquiry.

This type of inquiry investigates charities that have defaulted on their statutory filing obligations with the commission on two or more occasions in the previous five years.

Scrutiny carried out as part of this class inquiry identified additional concerns that led the commission to open a statutory inquiry in November 2019.

The inquiry examined a number of issues, in particular the adequacy of the charity’s financial controls, its property and reputation, and avoided or managed conflicts of interest.

The charity’s aims include the relief of suffering of abandoned and neglected animals through rescue and rehoming and providing accommodation to such animals.

It operates from a property in Kent called Brickyard Farm, which comprises a detached house and 35-40 acres of land.

The detached house and garden is not part of the charity and is occupied by trustees A and B, who are married to each other.

The property was purchased by the couple in September 2012 with a loan from an individual known to them.

In June 2015 the charity received a £200,000 donation from another charity.

The money was credited to the charity’s bank account, but about a month later it was paid to the individual in part payment of the loan.

In September 2017 a 25-year lease was created out of the property’s freehold and granted by the married trustees to the charity.

The £200,000 that had been paid to the individual was then designated as a pre-payment for the lease from the charity to the married trustees for the charity’s use of their land.

At this time, the charity was without the required number of trustees and therefore could not validly decide to enter into the lease.

Additionally, both parties to the lease were the same people, both landlords and tenants, despite the fact that it is not legally possible to enter into a contract with yourself.

Consequently, the inquiry found significant doubts about whether the lease is legally valid.

The commission found no evidence the conflict of interest was effectively managed, and the charity did not have the required number of trustees at the time to act.

Investigators also found that unauthorised payments of £2,925 were made to trustee B for working at the charity’s cafe.

The trustee later claimed that he was unaware of the clauses in the governing document prohibiting any payment to trustees without prior approval from the commission and has since repaid the money.

In addition, the charity failed to file annual accounts and annual returns on time for five consecutive years between 2015 and 2019.

During the course of the inquiry the trustees of the charity changed.

Trustee B resigned alongside one other trustee, and three new trustees were subsequently appointed.

The commission concluded that the former trustee board were responsible for misconduct or mismanagement in the administration of the charity and in breach of their trustee duties.

As a result of the inquiry the new trustee board is now more aware of its duties, and has taken steps to implement an action plan that includes strengthening internal financial processes and reviewing the charity’s lease, the regulator concluded.

The commission intended to issue official warnings to the married trustees but, as one resigned, and warnings can only be issued to current trustees, they were was issued to trustee A in March this year.

The commission said: “An effective charity is run by a properly appointed, clearly identifiable board or trustee body with the minimum number of trustees, as required by its governing document.

“Trustees must ensure that their charity has adequate financial and administrative controls in place, and that the funds of their charity are applied for the benefit of the public for which it has been set up.

“It is vital that trustees avoid becoming involved in situations in which their personal interests may be seen to conflict with their duties as trustees.”

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