A chief executive with sole control of spending at an organisation that received £672,000 from Comic Relief committed "a terrible abuse of charity" when he diverted £50,000, the Charity Commission said today.
Comic Relief alerted the regulator to concerns about possible fraud at the Busoga Association (UK) in 2013.
In a statutory inquiry report published today, the regulator said the unnamed chief executive was also the "de facto trustee" because of the amount of control he enjoyed.
The report says the chief executive, who set his own salary, admitted diverting £50,000 of Comic Relief funds raised by the public and intended for a project in Uganda to pay consultants for developing a grant proposal.
He did not approach any other consultants for a quote.
The report says there was insufficient evidence to "verify the end use of funds".
It adds: "The inquiry considers that this is evidence of misapplication and misconduct and/or mismanagement in the administration of the charity by the chief executive."
Comic Relief awarded the association, which was set up to relieve poverty worldwide, particularly in the Busoga area of Uganda, £672,170 between 2008 and 2012.
Of this, £642,270 was for two projects in Uganda and £29,900 was to develop the now defunct charity in the UK.
A total of £559,547 for the Ugandan projects was transferred from the charity’s bank account into overseas bank accounts in the names of the projects, not in the name of the charity’s partners for the two nominated projects, leaving £82,723 unaccounted for.
"The inquiry saw insufficient evidence to be able to verify the end use of funds in relation to the Ugandan projects in order to form a view whether or not they had been properly applied in furtherance of the charity’s objects," the commission's report says.
The investigation discovered none of the trustees had daily oversight of the charity and the chief executive "was acting in the capacity of a de facto trustee".
Payments to the chief executive of £78,932 were identified.
"The chief executive exercised control of the charity and its finances, acting in his own self interests in setting and authorising his own salary and other payments, and applying the charity’s funds as he saw fit, including diverting £50,000 of restricted charitable funds," the report says.
"A criminal offence may have potentially been committed by the chief executive."
Amy Spiller, head of the investigations team at the commission, said: "The trustees of the association failed to protect their charity, allowing their chief executive to use the charity for his own agenda.
"This was a terrible abuse of charity on his part and a complete failure by the other trustees to hold him to account."
The chief executive has been disqualified from acting as a trustee and from holding any office or employment with senior management functions for 10 years.
One former trustee signed a voluntary undertaking not to act as trustee for five years.
A spokeswoman for Comic Relief said it took any potential misuse of its funds very seriously.
"In April 2013 we reported this matter as a potential fraud to the police and as a serious incident to the Charity Commission, which as a result undertook a full investigation of the Busoga Association," she said.
She said the charity received £672,000 from Comic Relief over a four to five-year period, of which £82,723 was unaccounted for.
"We are constantly reviewing and strengthening our policies and procedures, noting that these will have changed since this matter first came to light in 2013," she said.
The association was removed from the register of charities in 2015.