Community Action Furness, which provided training and support services to disadvantaged people in Barrow-in-Furness, Cumbia, went into liquidation two weeks ago, making more than 20 employees redundant.
Barrow borough councillor Jim Hamezian said: “Lots of people are up in arms about how £2m of taxpayers’ money has just gone missing.”
He said the charity had spent nearly £3m in grant money on refurbishing its headquarters in the town. The building is currently valued at £450,000.
“This is a charity that started with fantastic and genuine intentions and now we see this,” Hamezian said. “We need a public enquiry into how money was spent and where it has gone. It is no good to declare it bankrupt and close the books. Something needs to be done about it.”
He added: “I’m not blaming anyone. My concern if for the people who will lose their services and their jobs.”
The Charity Commission launched a formal inquiry into Community Action Furness in March following the suspension of its chief executive, Anne Diss, and deputy chief executive Lynne Murray in January.
According to Barrow-in-Furness paper the North-West Evening Mail, the pair were subsequently arrested in relation to “financial irregularities”, but were released on police bail without charge. Murray is also believed to be claiming nearly £80,000 as a creditor of the charity.
The commission said in March that the inquiry was “a precautionary measure, given the serious nature of the concerns raised, which related to the charity’s financial controls”.
A spokesman for the commission said he was unaware the charity had subsequently gone into liquidation.
Diss was unavailable for comment at the time Third Sector Daily went to press, while Murray could not be traced.