The former chief executive of a defunct aid charity that helped landlords avoid business rates has been banned from acting as a company director for eight years.
Maurice Smith, aged 74, of Cowden in Kent, who registered the Kenya Aid Programme in 2010 after the 2008 riots in Kenya, was disqualified from being a company director by the Insolvency Service from 21 April. His fellow director, Phillip Charles Turtle, 50, of Redhill in Surrey, received a four-year disqualification on 17 March.
Smith was disqualified for causing the charity "to undertake activities that placed its reputation at risk", according to a statement from the Insolvency Service. Turtle was disqualified for failing to ensure this did not happen.
The charity became insolvent after it was ordered in 2013 to pay a £3.2m tax bill when its part in helping landlords avoid local authority business was uncovered.
Charities are given mandatory business rates relief of at least 80 per cent. The Kenya Aid Programme was among a number of charities that offered to occupy vacant commercial buildings, thereby reducing the landlord’s rates liability, in return for donations.
But in August 2013, a district judge at Sheffield Magistrates’ Court ruled that the charity, which at the time had an income of £81,000, was leaving two warehouses in which it stored furniture to be sent to Kenya "mainly unused". It was ordered to pay back the discounts it had received – £1.76m for one building and £1.51m for the other.
The Insolvency Service launched disqualification proceedings against Smith and Turtle. Rather than go to court, the pair signed undertakings, which have the same effect as a court order in disqualifying them from directorships.
After the disqualification, Smith told the Daily Mirror newspaper the money had been spent on the charity’s objects in Kenya.
"I still believe we were in the right, I feel very bitter," he told the Daily Mirror.
"It was not tax evasion; it was legal tax avoidance."
After a similar case in May 2013 involving the Public Safety Charitable Trust, the Charity Commission issued an alert, warning charities against taking on buildings of which they were not making sufficient use.
The commission is currently investigating the business rates relief arrangements of the Kenya Aid Programme, the Public Safety Charitable Trust, the Augustine Housing Trust and the Africa Relief Trust.
A spokesman said the commission could not comment while the investigations were continuing.
The Kenya Aid Programme, the Public Safety Charitable Trust and the Augustine Housing Trust are listed on the commission website and marked as insolvent. The Africa Relief Trust has been removed.
Third Sector was unable to contact representatives from any of the four charities, Smith or Turtle for comment.