Development charity 'faces closure' if bank accounts remain frozen

Jole Rider Friends is appealing to the charity tribunal after the Charity Commission froze its bank accounts and credit card because two trustees paid themselves in contravention of the governing document

An international development charity could be forced to close if Charity Commission orders to freeze its bank accounts and credit card are not overturned, the charity tribunal has heard.

Trustees of Jole Rider Friends, which provides facilities and equipment at educational establishments in Africa, had their appeal against the freezing of the charity’s bank accounts heard by the tribunal in London yesterday.

The commission told the tribunal it had frozen the charity’s accounts because of concerns that its two trustees had paid themselves amounts totalling up to £300,000 over a nine-year period, in contravention of the charity’s governing document.

Lawyers for the regulator argued that protective orders for two bank accounts and a credit card were necessary to prevent further payments.

The regulator said in October it had opened a statutory inquiry into the charity because of concerns about potentially unauthorised payments and persistently late accounts.

This led to two bank accounts and a credit card connected to the charity and its two trustees, David Swettenham and Helen King, being frozen after the commission issued protective orders to protect the charity’s assets.

The orders mean that the commission has to sign off any withdrawals from the affected bank accounts and card.

At the hearing yesterday, the regulator argued that orders should remain in place because the two trustees received approximately £300,000 in "unauthorised payments" between 2008 and 2017, although the trustees said the amount they had received was closer to £250,000.

The trustees had previously been asked by the commission to repay £192,500 to the charity that they had withdrawn as salaries, which the commission said contravened the charity’s governing documents, the tribunal heard.

The commission told the tribunal that the charity’s governing documents specifically forbade any payment to a trustee and it had informed the trustees of this fact more than two years ago.

The trustees were also provided with an action plan in September 2016 to address some of the commission’s concerns about the charity’s governance and finances. One suggested action was to consider changing the section of the governing document that prohibited payments to trustees.

The commission said Swettenham and King had continued to breach the charity’s governing documents by taking payments, despite the regulator having brought the issue to their attention, the tribunal heard.

The commission therefore argued that there was a risk that payments would continue to the trustees of the charity if the orders were not retained.

The tribunal heard that three other trustees were appointed in January 2017, but all three had departed the charity by June.

A decision taken by the new trustees in February 2017 to authorise payments to Swettenham and King was invalid, the commission told the court, because the charity’s governing document remained unchanged and specifically prohibited any payments to trustees.

Swettenham told the tribunal that he and King "do not pursue properties or money" and were driven by a desire to help young people in Africa access education. But he said that both trustees were running the charity on a day-to-day basis, and "could not manage without being paid for running the organisation".

He argued that if the freezing orders remained Jole Riders Friends "would not continue through 2018" and the protective orders had led to difficulties in paying insurance and were "totally inhibiting the charity".

Swettenham said that one of the bank accounts subject to the freezing order belonged to a dormant organisation called the Jole Rider Foundation and was not a bank account for Jole Rider Friends.

But he also told the tribunal that the trustees had prioritised the work of the charity above the filing of accounts with the Charity Commission – which is a legal duty for all charities – and the charity had not followed up on the action plan issued by the regulator because the plan was "advice" and it did not hear from the regulator for more than a year after the plan was issued.

Swettenham criticised the commission for failing to visit the charity’s premises to discuss its concerns about the payments and the charity’s financial recordkeeping.

According to the regulator’s website, Jole Rider Friends is 340 days late with its accounts for the year to 29 March 2016. Its last reported income, for the year to 29 March 2015, was £204,461, against an expenditure of £189,004.

A decision on whether the orders will be retained is due by the end of next week.

The commission’s inquiry into Jole Rider Friends continues.

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