The Office of the Scottish Charity Regulator has criticised the trustees of a defunct regeneration charity after they approved a £500,000 severance package for its former chief executive.
The OSCR began an investigation into Glasgow East Regeneration Agency in January 2012 after reports in the media that its chief executive, Ronnie Saez, received the redundancy payout after the charity was wound up.
GERA, which had purposes including relief of poverty and unemployment, was wound up in March 2011 when it merged into a Glasgow-wide body known as Glasgow's Regeneration Agency and transferred all its assets to it.
The charity’s trustees, which include Jim Coleman and George Redmond, two Labour councillors on Glasgow City Council, applied to the OSCR to wind up the charity, but made no mention of the severance payment they intended to approve for Saez.
The package contained three elements, including a statutory redundancy payment and a payment to Saez’s pension scheme, which the charity was required to make.
But trustees also approved a discretionary element to the package worth £232,708, which was an additional payment to Saez’s pension scheme.
Five of the charity’s eight trustees were present at a meeting to approve the payment and the motion was passed unanimously. The charity later told the OSCR that the payment was justified because it put Saez on a par with some Glasgow City Council employees who had recently been made redundant.
But the OSCR said the trustees had failed in their duties under section 66 of the Charities Act 2005, which provides that trustees must act in the best interests of the charity and exercise due care and diligence.
"We have concluded that the trustees breached their section 66 duties when deciding to make the discretionary payment," the report reads. "This is considered misconduct in the administration of the charity. A very considerable sum of the charity’s assets which should have been used to further the charity’s purposes was removed from the charitable sector by the trustees for the private benefit of a former employee."
GERA accounts in the year to March 2011 show an income of nearly £13m.
The OSCR said it was powerless to recover the money but "strongly recommended" that the trustees undergo training in their section 66 duties.
Ronnie Saez was contacted by Third Sector but declined to comment on the payout. Glasgow City Council said it would implement training for councillors.
Coleman said: "I have asked the chief executive to provide training to all councillors who are trustees of a charity and I am happy to take part in that."