Defunct Essex Islamic Trust had 'multiple failings'

Charity Commission criticises trustees and says the charity provided it with misleading information

The Charity Commission has castigated a defunct, family-governed Islamic charity for a litany of failings including unmanaged conflicts of interest and providing it with misleading information.

According to a commission inquiry report published yesterday, the Essex Islamic Trust was registered in 1995 and ran Islamic education and prayer classes in Romford, Essex.

Its income in 2006/07 was nearly £21,000. Its trustees were a father, mother and daughter from the same family. The investigation discovered that the father, who was also the chair, dominated the charity "to the exclusion of the other trustees".

The inquiry was opened in September 2007 after the chair failed to provide adequate answers to commission questions about large undocumented cash withdrawals from the charity's account and how the charity was managing conflicts of interest relating to a building that it rented, which was apparently owned by the chair.

The chair told the commission that the ownership of the building had been transferred to a private family trust. But the inquiry found that the building was actually owned by the chair and three other members of his family, including the two trustees, in a private capacity.

The inquiry found no evidence that the trustees had recognised the conflict of interest or that they had made any effort to judge whether the rent they paid for the building – amounting to nearly £40,000 over three years – was a "reasonable amount".

The commission concluded that the trustees were guilty of self-dealing and a "clear breach of trust" because they had "received benefits that were not authorised by the charity's governing document or the commission".

The commission was also extremely critical of the trustees' lack of adequate record-keeping.

The chair told the commission that many documents had been destroyed in a burglary and an arson attack. However, the commission found that the trustees had continued to keep inadequate records subsequently and could not account for all the charity's transactions, including what had happened to nearly £10,000 that had been paid into a bank and immediately withdrawn in cash.

The commission concluded that the trustees were guilty of mismanagement in the administration of the charity.

While the commission was considering whether to use its powers to appoint additional trustees, the chair announced he was winding up the charity. It was removed from the register in November with remaining funds of £140.
The commission decided it would be disproportionate to take action against the trustees or try to recover the money they had received in rent from the charity.

"The inquiry established from the chair of the charity that the property was used for the various education classes the charity carried out and that the charity had therefore received some benefit from the transaction," the inquiry report says.

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