The Charity Commission ruled out using its powers to try to recover funds spent on non-charitable activities by the defunct charity Atlantic Bridge, the charity founded by the former defence secretary Liam Fox and run by his associate Adam Werritty, according to a new report from the regulator.
The regulator yesterday published a supplementary report about the charity, which was wound up by its trustees in September 2011 after a regulatory case report by the commission in July 2010 found that its activities were not charitable and said its "current activities must cease immediately".
The charity, which had several influential Conservative politicians as advisers, was founded to further public education and research on relations between Europe and North America. But in practice its activities promoted the ‘special relationship’ between the UK and the US that was established when Margaret Thatcher and Ronald Reagan were in power, the 2010 report said. The activities included conferences and a lecture series called the Margaret Thatcher series.
The new report says that the regulator could use its powers to recover funds spent on non-charitable activities only if it was clear that trustees were "sufficiently culpable in law to make good the loss and that the proceedings were justified in the public interest".
It says: "During the commission’s investigation into Atlantic Bridge, the issue of seeking recovery of funds from its trustees was considered.
"While the trustees did apply Atlantic Bridge’s assets in pursuit of non-charitable activities, the commission has found no evidence that the trustees had acted in bad faith.
"The trustees maintain that they mistakenly believed that they were acting lawfully and pursuing a correct interpretation of Atlantic Bridge’s objects as stated in its governing document.
"In the absence of compelling evidence of deliberate wrongdoing on the part of the trustees, or evidence that those who donated to Atlantic Bridge were misled in any way into providing such donations, the threshold for a further or new investigation will not be met."
The report also says that the regulator was satisfied that Atlantic Bridge had no outstanding funds when it was closed after it gave £414.55 to the Winston Churchill’s Britain at War Experience.
The charity had an income of £78,618 and expenditure of £114, 972, of which £50,000 was for a tax liability, in the period between February 2010 and the time it was wound up in September 2011, it says.
It also says that although Fox might have broken parliamentary rules by allowing Atlantic Bridge to operate from his parliamentary office while he was a trustee between September 2003 and June 2009, this was not in breach of charity law.
Fox founded Atlantic Bridge in 1997, but stood down as a trustee once he became defence secretary in May 2010. The Chancellor, George Osborne, the foreign secretary William Hague and the employment minister Chris Grayling have in the past been on its advisory board, as have five US Republican senators and congressmen.
Speeches from the Margaret Thatcher lecture series focused on Thatcher’s personal contribution to the ‘special relationship’ and said the it should be strengthened and promoted, the 2010 report said.
"This suggests that the activities of the charity are promoting a political policy [that] is closely associated with the Conservative Party," it said.
"The educational objects of the charity have not been advanced by its activities because these activities promote a particular point of view that is not uncontroversial and are consequently not educational."