A community charity that allegedly made unauthorised payments to people connected to its trustees has become the subject of a Charity Commission statutory inquiry.
Concerns were first raised with the regulator in December 2012 that trustees of My Community UK, a charity with a focus on Muslim communities, "were failing to properly manage conflicts of interest and that people closely connected to the trustees were obtaining unauthorised private benefits", according to a commission statement published today.
The commission inspected the books and records of MCUK, which has the objects of relieving poverty, advancing education and promoting good health to individuals in need, in particular to the Muslim community. The commission paid it two visits in 2013.
During this time the charity took "some corrective steps including adopting a conflicts of interest policy", the commission statement said, but the regulator also "became increasingly concerned about the trustees’ continuing inability to properly account for the charitable expenditure".
The regulator said today that it had opened a statutory inquiry into the charity on 3 February to examine the management of conflicts of interest and of the charity as a whole by the trustees, the relationship with companies linked to the trustees and the accountability of significant funds held in the charity’s bank account.
The charity was registered in July 2010. Its income in its first three years of operation has risen from £12,724 in year one to £132,658 in the 12 months to 30 April 2013. According to the commission’s register of charities, none of its four trustees are trustees of any other charities.
Its most recent accounts show that Tazeem Shah, its chair, received payments of £5,000 for consultancy work and that Zahir Shah, the spouse of a trustee, received £15,720 for IT network, infrastructure and website development, with the payment "made on an arm's-length basis".
The accounts also show that the charity controlled the operations of Muhabba Ltd, which it set up as a gift shop to generate income. The company was founded in April 2012 but was dissolved in February this year.
In a statement, Tazeem Shah said the charity would be cooperating fully with the commission and was keen to respond to any concerns it had.
"The current trustees and management feel that this will provide them with the opportunity to strengthen and improve their systems and processes," she said.
"Over the last few years the charity has gone from strength to strength in terms of delivering a range of fantastic projects and improving its governance by recruiting new trustees. However, the existing trustees are keen to further improve their governance procedures as well as manage conflict.
"We look forward to applying any further actions and recommendations by the commission."