The Charity Commission has closed a poverty relief charity after a statutory inquiry that lasted almost 13 years, and has redistributed more than £13m of the charity’s funds to good causes.
Relief for Distressed Children and Young People, which was a poverty relief charity working in Iraq, had been the subject of a statutory inquiry since August 2006, after concerns were raised about its administration and management.
The commission then froze three of the charity’s bank accounts, which contained approximately £13.8m.
The commission’s inquiry focused on almost $6.4m (£4.9m) that the charity said had been spent on building orphanages in Iraq.
But the commission found that more than $5m (£3.8m) had been passed to non-charitable organisations or friends and families of the trustees in the country.
The trustees were suspended in 2007, with the chair removed that same year and the other trustees in 2008.
A £3.5m potential tax liability resulting from the trustees’ conduct was identified, and in May 2009 Charles Cox and Ian Mills from the accountancy firm PKF were appointed interim managers.
The interim managers were tasked with settling any tax liabilities deciding the charity’s future, the commission said.
The inquiry found that the charity was mismanaged by the trustees, including a failure to manage conflicts of interest and providing false and/or misleading information to the regulator.
It also concluded that there was misapplication of the charity’s assets and a failure to meet the charity’s rules preventing trustees from receiving financial benefit. The trustees were adjudged to have had little to no knowledge of the charity’s financial controls or activities.
The charity has now been removed from the register and more than £13m of its assets have been awarded to three charities working to relieve poverty in Iraq.