Regulator issues warning to trustees who failed to document loans worth millions of pounds

Three trustees of a Jewish educational charity have been issued with an official warning by the regulator after they oversaw borrowing of almost £2m in inadequately documented loans. 

The Charity Commission said it had concluded an inquiry into the Bersam Trust, which raises funds for charitable causes including the support of the Orthodox Jewish religion and education. 

The trust, which is based in Salford, Greater Manchester, leases a building to a faith school and funds some of its support costs. 

It said the warning and reports by the Charity Commission were unjust.

The regulator said it opened an inquiry into the charity in January 2019 because of concerns about its financial arrangements and governance. 

It found that during the financial years ending 31 March 2014 to 31 March 2018, the charity received 56 loans totalling £2.4m, in addition to loans from a bank. 

The commission said that 49 of those loans, which came from a variety of sources including individuals and other charities, and accounted for £1.9m of borrowing, were not documented in written agreements. 

While there was no evidence money was lost by the charity, the regulator said, the actions of the trustees exposed the organisation to significant and unnecessary risk. 

It found accounting discrepancies amounting to millions of pounds between the financial information reported to the commission in the charity’s annual returns and the funds recorded in its bank statements. 

But the regulator accepted that the funds related to loans, particularly those that were repaid within a 12-month period, and did not find that trustees had provided false or misleading information. 

The regulator found that trustees had failed to manage conflicts of interest appropriately during meetings, adequately document meetings, even when significant decisions were taken, or follow an action plan issued by the commission to address earlier failings. 

It said it had issued the warning to the three trustees – Joshua Waldman, Abraham Vogiel and Jehudah Waldman – setting out that they must take actions including properly recording loans and significant decisions made about the charity, or face further regulatory action. 

A statement from the charity said it managed to borrow £2m interest-free and unsecured to build a new school only to be punished by the commission with a warning after the regulator misunderstood what had happened. 

The statement said the regulator “used its own unqualified accounting staff to get a freezing order which it had to revoke when it realised its fundamental error”. 

It said the regulator acknowledged that no funds were unaccounted for. 

“The commission has never applauded (and not even acknowledged) the magnificent new structures that were built with the support of the local community and parents of the school,” the statement said. 

“In these circumstances, the trustees feel that the official warning and reports issued are unjust.”

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