A Gibraltar-based company has repaid more than £2.1m it was loaned by a charity after a conflict of interest relating to the charity’s only trustee led to a Charity Commission inquiry.
The commission first contacted the Reb Moishe Foundation in 2014 about a £2m loan the charity made to a Gibraltar-based private company called Gladstar Ltd, which was connected to one of the charity’s trustees, Jacob Plitnick.
In 2015, the charity’s accountants contacted the commission about the loan, which was made in March 2006 with an interest rate of 24 per cent a year, falling to 10 per cent a year in 2011.
Plitnick was a secretary of the company at the time the loan was made, but later became a director.
The commission established that the charity had only one active trustee, Plitnick, because the other trustee had died and had been removed from the charity’s online records in October 2013.
The Charity Commission opened a statutory inquiry in May 2015, with the interest on the loan making the total amount owed to the charity more than £2.2m.
The inquiry found unmanaged conflicts of interest. Plitnick agreed to transfer the proceeds of the sale of six properties owned by Gladstar, amounting to more than £2.1m, to the Official Custodian for Charities, and this was eventually transferred to the charity in October 2017.
Plitnick had failed in two appeals to the charity tribunal against the transfer of funds to the OCC.
The commission said that Plitnick had resigned from the charity and promised he would not take on any more trusteeships. Two new trustees had been appointed, the commission said.
The new trustees had developed policies for grant-making, investment and conflicts of interest, and had opened a new bank account for the charity, the commission added.
Harvey Grenville, head of investigations and enforcement at the Charity Commission, said: "Failings of governance and financial management unfortunately put this charity’s assets on the line. The good news is that, after our intervention, more than £2m can now be put towards important charitable causes.
"This inquiry demonstrates that, if not properly managed, conflicts of interest can seriously hamper trustees from acting in the best interests of their charity."