Formal inquiry for Catz Club

Charity Commission to investigate childcare charity after unearthing links with Labour Party

The Charity Commission has opened a formal inquiry into Catz Club after it discovered the childcare charity paid £15,000 to attend a Labour Party event last year, £5,000 of which was deemed to be a donation.

The commission discovered the donation on Wednesday in its investigation into internal financial controls at the charity, whose accounts for the year to September 2007 are more than four months overdue. It said it would be establishing the nature of the event for which the £15,000 was paid as part of the formal inquiry.

Earlier this year the Labour Party refunded a £7,500 donation it had received from the charity, which operates under the name Schoolfriendetc. Political donations by charities are not permitted.

Catz Club told the commission at the time that the donation had been caused by an "administrative error" (Third Sector Online, 5 September).

Catz Club released figures in October indicating that Futurebuilders, the Government loan fund, had agreed to write off £570,000 of a £1.3m loan it had made to the charity (Third Sector Online, 30 October). However, Futurebuilders yesterday confirmed figures obtained by the Conservative Party that showed the true amount was more than £840,000.

Shadow charities minister Nick Hurd welcomed the Charity Commission inquiry. He said: "The more light is shone on the links between the Labour Party, the Labour Government and this charity, the more evidence emerges of questionable practices.

"Labour ministers need to come clean about why £840,000 of taxpayers' money has been written off, and what role the Labour Party played in soliciting charity funds meant for needy children."

A Labour Party spokeswoman said the party would refund the £5,000 donation. She said: "The Labour Party has complied with party funding rules throughout its dealings with Catz Club."

Catz Club declined to comment.

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