The Royal Zoological Society of Scotland was guilty of "a number of weaknesses" in its financial controls and governance, according to a report by the Office of the Scottish Charity Regulator, published today.
The OSCR investigated the charity, which runs Edinburgh Zoo, having received a number of complaints from different sources between January and May 2011.
The complaints alleged there had been misconduct by a senior manager, that the zoo had leased two giant pandas without having the funds to pay for them, that the zoo had not made changes recommended in an earlier zoo licensing report, and that it was misinterpreting its own governing document.
The OSCR report says trustees had carried out their own investigation into misconduct and found "significant weaknesses" in the zoo’s procurement policy, and in trustees’ supervision of finance and of senior managers, including evidence that staff had agreed contracts without the knowledge of the board or the finance department.
Two senior members of staff, Gary Wilson, the chief operating officer, and Iain Valentine, former director of education, were suspended by trustees during the investigations. They have both since returned to work. Valentine came back in a different role involving research and conservation, the zoo said.
"We acknowledge and endorse the series of recommendations made in the reports commissioned by the trustees to strengthen procedures and controls," the OSCR report says.
"The charity trustees have already undertaken considerable work to identify areas that need to be strengthened and are taking appropriate action to address the weaknesses.
"We acknowledge that some of this work was already in progress before the complaints were received by OSCR."
The report says there was no evidence to suggest that the trustees had not acted in the best interests of the charity, and that "extensive investigations conducted by the charity found no evidence of misappropriation of charitable assets".
It says there is no reason to believe trustees had not acted with care and diligence in the decision to lease the two pandas and in meeting the recommendations of the licensing report.
The report says the zoo’s governing documents were potentially ambiguous, including clauses covering who could be elected to the board. This left decisions open to challenge and the charity should consider whether to address this, it says.
Manus Fullerton, chair of the RZSS, said the OSCR had made a number of recommendations in relation to internal controls and governance.
"It acknowledges that the trustees had already started work on implementing changes covered by their recommendations prior to the inquiry," he said. "Policies relating to financial procedures, procurement and contract management have been reviewed and significant steps taken to strengthen management controls."
He said action was being taken to meet all of the OSCR’s recommendations.