The Charity Commission has opened a statutory inquiry into the All Wales Ethnic Minority Association after a Welsh government investigation uncovered "significant and fundamental failures" in the charity’s control and governance framework.
A report into the charity, following an investigation by the internal audit services of the Welsh government was published yesterday with the Big Lottery Fund. In a statement the government said all public funding for Awema, totalling about £3m, would be terminated with immediate effect.
The move would appear to spell the end for the charity, after Rita Austin, the organisation's chair, said on its website that trustees would be meeting to "manage an orderly exit" for the charity.
The report concludes that there were failures of control and governance throughout the organisation, which aims to support multi-ethnic communities in Wales and tackle discrimination.
A spokeswoman for the Charity Commission said it had opened a statutory inquiry into Awema "to consider serious concerns as to the charity's governance and financial controls". She said the commission would publish a statement of the results once the inquiry was completed.
The Welsh government’s report says its investigation was hampered by the absence of a number of sources of information, including audited accounts for the charity for 2010/11, any management accounts and key financial information.
Board meetings at the charity were irregular, according to the investigation, and it met only once in 2009. The report found that the charity’s board was only ever provided with limited financial information, did not have any assurance of the solvency of the organisation, and had never challenged this.
It found that the chief executive, Naz Malik, was also a trustee, which it says gave rise to conflicts of interest. "This conflict has increased over time as members of the CEO’s family were employed or volunteered within Awema," it says.
A day before the investigation started, the report says Austin informed the Welsh government that Malik had brought to her attention a number of expenses paid from Awema’s funds, which he described as "potential benefits that I may have had in the past". These included the charity paying for a £110 car parking fine, £800 worth of sports tickets and staff gym memberships totalling £2,120.
"Our review showed that a high volume of transactions were processed through petty cash," the report says. "Whilst all of the payments we examined were supported by the relevant vouchers and receipts, we did have concerns with regard to value for money."
The report is also critical of the organisation’s structure and salaries, saying that those of the three directors were high compared with those of other staff. "A review of the organisational structure showed that the CEO has two directors reporting to him, one of whom is his daughter," the report says. "This represents a clear conflict of interest." It also says that her salary increased several times from £20,469 in 2008 to £50,052 this year.
"In light of these findings, we cannot provide any assurance that there are appropriate arrangements in place to safeguard and make proper use of the Welsh government, Welsh European Funding Office and Big Lottery Funds entrusted to Awema," the report says.
The report says that a copy will be given to South Wales Police, the Charity Commission and the Auditor General for Wales.
Austin said in the statement on Awema’s website that trustees would be meeting today. "All of us who continue to serve on the board at Awema – myself as chair, continuing trustees and CEO - will carry out our responsibility to manage an orderly exit for the only minority ethnic development organisation which works across Wales," she said. "We are opening discussions with officials to this effect."