The Charity Commission has applied to the High Court for an order forcing four people involved with a children’s charity to account for assets transferred to a company of which two of them were directors.
The case relates to the Greenfinch Charitable Trust, which has the objects of advancing the education of children in care or living with foster parents. Registered with the commission in 1992, the charity was placed in liquidation in 2010 and is subject to a statutory inquiry by the commission.
The defendants are Tracey Cross and David Jennings, former employees of the charity, Maureen Ward, a trustee who co-founded the charity, and her husband Albert.
The commission originally submitted a Particulars of Claim document at the Chancery Division of the High Court in August last year. A hearing in the High Court today will hear an application for a delay to proceedings.
The document says that, in 2007, Jennings and the Wards agreed an arrangement "to radically alter the way in which the charity provided its services".
This involved a transfer of staff and operations to a non-charitable company, A&D Consultancy, which was 50 per cent owned by Jennings and 50 per cent by Albert Ward, the document says.
The claim says that there was "unnecessary and unauthorised expenditure incurred by the charity", which paid consultancy fees totalling hundreds of thousands of pounds to the company.
The commission accuses the four individuals of various breaches of duty and dishonesty, including breaches of duty by Jennings in the de facto role of trustee.
The claim says that the four should "account to the charity for the value of the charitable assets transferred in breach of fiduciary/directors duty and/or in breach of trust and/or in breach" – or provide the charity with compensation.
In addition, Jennings and Albert Ward must show "that any sums received from A&D were and are held on constructive trust for the charity", and repay any profit to the charity.
The commission is also claiming legal costs.
In a document submitted to the court, Jennings asks the court to reject the claim. It says that Jennings was at all points dependent upon advice from the charity's external auditors and accountants and directions from Maureen Ward. The document says: "At all times while the first respondent was working for and with the charity, he did so diligently and at all times transparently and in his opinion in the charity’s best interests."
Jennings also criticises the commission’s slow response to the serious incident report on the charity that he submitted to the commission in autumn 2008, saying it had been shamed into action after losing face over the Cup Trust controversy.
He also complained about the commission in a written submission to the Public Administration Select Committee in January last year, ahead of its report on the commission, published in June 2013.
A spokeswoman for the Charity Commission said: "I can confirm that we have an inquiry open into the Greenfinch Charitable Trust and are taking steps to recover funds belonging to the charity in accordance with our published policy. The proceedings themselves are aimed at recovering funds that belong to the charity."
- This article was corrected and clarified on 24 September. It originally said that three (rather than two) of the four people named in the order were directors of the company. It was also amended to make it clear that David Jennings had said that he had been dependant on advice from the charity's external auditors and accountants, rather than "external professional advice", and directions from Maureen Ward.