The Charity Commission has opened a statutory inquiry into a Christian charity that provided unsecured loans totalling more than £900,000 to one person.
The regulator said its probe into Citygate Christian Outreach Centre, which runs a church in Beckenham, south London, would also examine the charity’s awarding of payments and other financial benefits to trustees and others connected with the charity.
The commission said the charity was originally investigated as part of its ongoing class inquiry involving charities that have failed to file accounts for two or more years. The charity has since filed its outstanding accounts.
Citygate’s latest accounts, for the year to the end of March 2020, show that it made loans totalling £457,000 over the course of the year to an individual on a personal basis so he could build a home for disabled children in Dubai.
The charity’s accounts for the previous year identify Stephen Flint as being the recipient of the loans.
The statements show that £163,000 of the funds were initially given to Julian Melfi, pastor of the church, and a further £88,500 was transferred to trustee Alan Samways before being passed to Flint.
The 2019/20 accounts, which show the charity had an income of just under £1.4m and spending of almost £1.1m, say of the loans: “There is some doubt as to whether the funds can be extracted from the United Arab Emirates or that the individual is in a position to repay these funds from assets available in the UK.
“It may be necessary to make full provision for loss on these funds in the accounts, which would result in a deficit for the year of £151,493, rather than a surplus of £305,457.
“The trustees consider that the loans are fully recoverable but have been unable to provide any evidence that this is the case.”
The accounts show that the charity continued to provide loans to Flint after the 2019/20 year end.
“The charity's total exposure to amounts that may be non-recoverable totals £875,450 at the date of the approval of these financial statements,” they say.
The independent auditors say in the accounts that the “non-payment of loans identified may cast significant doubt on the group's ability to continue as a going concern”.
The regulator said its inquiry would examine matters including the charity’s decision-making process in relation to the unsecured loans, whether there had been any financial loss to the charity, whether potential conflicts of interest in relation to financial transactions had been properly handled and whether there had been any unauthorised private benefit to trustees and/or connected parties.
The charity did not respond to a request for comment from Third Sector before publication of this story.