The Charity Commission has appointed interim managers at a London health charity to examine potential claims against former trustees.
The regulator opened a statutory inquiry into the Island Health Trust in November 2017 after it emerged the charity paid a consultancy firm owned by its former chair.
Jim Fitzpatrick, the Labour MP for Poplar and Limehouse, told parliament last year that the trust had paid Suzanne Goodband Interim Solutions £349,955, which represented 68 per cent of its income over two years.
Fitzpatrick said trustees had been removed without notice or agreement and approved payments for periods before they were appointed, which "seems to me to be bordering on fraud and possibly criminal".
He added: "There is serious unhappiness that a much-used, needed and appreciated local health centre, with professional clinicians and caring staff, is being bled by people who should be cherishing, nourishing and promoting it."
Suzanne Goodband, a former chief executive of the Royal Berkshire and Battle Hospitals NHS Trust, resigned as chair of the Island Health Trust in December last year.
The commission's inquiry into the trust, which was founded in 1992 and works to improve healthcare in the London boroughs of Tower Hamlets and Newham, remains ongoing.
The inquiry is considering, among other issues, how trustees reached the decision to spend charitable funds on using the consultancy firm.
In a statement today, the commission said: "The inquiry has found that the issues under inquiry led to the direct loss of charitable funds and the options for recovery have not yet been sufficiently explored and considered.
"In light of this, the commission has exercised its legal powers to appoint Helen Briant and Lucy James of Trowers & Hamlins LLP as interim managers to the charity.
"They will independently examine and provide advice on potential claims against the former trustees.
"The current trustees will continue to remain responsible for matters relating to the operation, management and administration of the charity."
Fitzpatrick, who last year said the regulator "could have acted more quickly", told Third Sector: "I’m happy with this outcome, which shows the commission has taken this seriously in the end.
"We’ve been on this for more than two years and now we can see the end."
In a statement, the charity's trustees said they welcomed the development and would continue to collaborate with the commission as well as the interim managers.
They added: "The commission has made it clear that this action is in relation to decisions taken by the former trustees.
"The current trustees have been working hard to continue to provide services to its beneficiary population and we are committed to rebuilding trust and relationships with the local communities we serve."
Asked how much the interim managers would be paid, and for how long, a commission spokeswoman said: "Their fees will be available in the charity’s future accounts and set out in full in the report we will publish on conclusion of the inquiry.
"The inquiry will closely monitor progress and the interim managers will be in post until their work has been sufficiently progressed."
The commission has the power to appoint interim managers when it has identified misconduct or mismanagement, or believes there is a need to protect a charity’s property.