The Charity Commission has failed to act on its recent ultimatum to the Royal Albert Hall to initiate reform of its governing council so it is no longer controlled by seatholders who can make substantial sums by selling their tickets on the open market.
Instead the commission has agreed to resume discussions with the charity and defer any decision on imposing the reforms it says are necessary until it has heard more about a constitutional review being conducted by the hall itself. No further deadline has been set.
The commission has been in discussion with the hall about its governance since 2008, warning it in 2014 that the "significant profits" that could now be made by seatholders created "a real risk that council members will prefer their own interests to those of the charity".
It told the hall that if it did not produce proposals to amend its constitution by May last year, the commission would take action. When the hall did not comply, it set a second deadline of September, which was described as "an ultimatum" by Jon Moynihan, former executive chairman of the PA Consulting Group, who was elected president of the council last year on a prospectus to challenge the commission’s demands.
Again the hall did not comply and the commission took no action. But Moynihan wrote to the commission arguing that it did not fully understand and appreciate the contribution made to the charity by the seatholders. He then met commission officials and a subsequent meeting of the commission board decided to continue negotiations.
At present the 19 voting members of the hall’s 24-strong council are elected by the holders of 1,276 of the hall’s 5,200 seats that were bought in 1856 for £100 on 999-year leases by investors to help build the hall. Since then the seats have been inherited or traded.
Hall documents show that council members and their families control approximately 128 seats, each worth an average of £100,000 on the open market. They can sell unwanted tickets through the box office, which can yield between £4,000 and £5,000 a year per seat, or on the internet, which can yield more than twice that.
A small number of council members control, with their families, seatholdings that run into dozens and can earn £100,000 a year or more on the open market through tickets including those for popular shows such as Adele, Eric Clapton and Cirque du Soleil.
The commission has suggested that membership of the Corporation of the Hall of Arts and Sciences (the formal title of the RAH), could be extended to non-seatholders, and that the council could consist of one-third elected seatholders, one-third elected non-seatholders and one-third independent appointees.
As a last resort, the commission has the legal power to impose reform of the hall’s constitution through a "scheme", providing it is satisfied that the trustees should apply for one in the interests of the charity but have unreasonably refused or neglected to do so.
The commission’s decision to continue discussions was described as "good progress" in a recent email from Moynihan to the hall’s members, which described how his September letter to the commission had said "we did not feel that the alignment of interests that necessarily arise from the constitution were in any way unmanageable or unacceptable.
"On the contrary, the arrangement has served the charity well for over 145 years and there is ample evidence to support this. The commission’s attempt to constrain the involvement of members in the governance of the corporation demonstrated a failure to understand and appreciate the extent of the benefit that members bring to the charity and the harm that would be caused if the relationship were to be diminished."
Moynihan’s email to members attached an email to him from the commission chair, William Shawcross, about what Shawcross called "the current impasse". The email said the commission board had decided to defer the matter "pending clarification of the issues arising from the charity’s own governance review, and to give a further opportunity for discussions.
"Whilst acknowledging and respecting the differences between us concerning the independence of the council, we would like to see the extent to which the governance of the council can be improved to increase accountability and transparency and by dealing further with the issue of conflicts of interest."
A spokeswoman for the commission declined to comment. A spokesman for the hall said it was not prepared to publish its conflicts of interest policy, sent to the commission last year, or give any information about its constitutional review.
He confirmed that the charity, which received £40m in 1996 from the Heritage Lottery Fund and the Arts Council, received tax benefits of more than £1m a year that were "used for the charity's… education work with 100,000 people (of all ages) a year; more than 50 charity concerts we put on every year; restoration and maintenance of our nineteenth century Grade-I listed building; and many other charitable activities".