A poverty charity has been removed from the register after the regulator found three brothers “abused their position” as trustees.
The Charity Commission accused David, Sidney and Michael Chontow, the only trustees of their charity Achiezer, of exploiting the organisation for personal gain.
A seven-year statutory inquiry concluded that Achiezer, which had objects of making grants to support people in poverty, had entered into a series of financial deals with related companies that benefitted the brothers “to the detriment of the charity”.
The Charity Commission first investigated Achiezer in 2013 after it failed to file accounts for three years between 2010 and 2012.
Michael Chontow died before the inquiry opened while David Chontow died in September 2020.
The investigation identified further concerns related to Achiezer’s management of charitable funds and its connections with another charity, the Achiezer Association, as well as various trading subsidiaries. The commission opened a statutory inquiry in 2015.
The commission appointed interim managers to run the charity in October 2018, who would stay in place for the next two-and-a-half years .
Achiezer failed to file its accounts on time again in 2017, and the trustees missed the deadline when the commission ordered them to publish a financial statement.
In its inquiry, the regulator found that the charity had paid nearly £130,000 to the property company Dasim Partners, run by Sidney and David Chontow, between 2014 and 2016.
The commission said: “The inquiry found that the basis of these payments was unclear and it was impossible for the charity to manage the conflicts of interest which arose regarding these transactions because there were no independent trustees.”
Dasim Partners also received income from ground rents on the freeholds for 18 properties owned by the charity, on the instruction of the trustees, the inquiry found.
On discovering the arrangement, the commission told the trustees to create a dedicated bank account for Achiezer so it could receive the rents.
The inquiry says: “On 12 October 2018 the trustees confirmed that, despite attempting to open a new bank account for the charity with five different banks over the previous six months, they were unable to do so. The interim managers were able to open a bank account for the charity within six weeks of their appointment.”
The commission also found that the company Potential Investment Portfolio, where Sidney Chontow was a partner, leased storage units to the charity between 2012 and 2014, and claimed an 80 per cent reduction on business rates because the units were being used for charitable purposes.
The regulator said Bury Council’s own investigation found that the units were largely unused, and a liability of nearly £60,000 was eventually settled by Sidney Chantow and another of his businesses.
The Charity Commission said: “The inquiry found Sidney Chontow had received a benefit from this arrangement by attempting to avoid the business rates that would have been payable for the unoccupied warehouses. The trustees should have been more careful when entering into this lease to avoid incurring such a large liability.”
The regulator identified further concerns regarding a £100,000 interest-free loan to the charity, which was first recorded in the charity’s 2010 accounts. In the 2017 accounts, Achiezer said the loan was from an organisation called Finsbury Trust and had been turned into a grant.
But the commission said: “Despite further investigations and repeated requests for evidence, the inquiry has not been able to confirm the identity of ‘Finsbury Trust’ or… to locate any evidence that the charity received funds from this organisation.”
The report also found there was “no way of effectively managing the inherent conflicts of interest” which arose in “numerous complex related party transactions” between the charity, the Achiezer Association and other subsidiaries and companies controlled by the Chontow brothers.
It said: “The actions of Sidney and David Chontow, in this charity and the Achiezer Association, were significantly below that expected from trustees.” Both were disqualified as trustees in August 2020.
Third Sector was unable to contact Sidney Chontow for comment.