A trio of related charity trustees used tens of thousands of pounds of charitable funds to purchase high-end cars including Bentleys for their personal use and lived rent-free in charitable premises, the Charity Commission has concluded.
The regulator has published a report detailing its inquiry into the Manor Building Preservation Trust, which acquired and restored the Grade II listed building Goldington Hall in Bedfordshire.
The commission found that three trustees - Cyril Smith and his son and daughter-in-law Matthew Smith and Mariya Smith - and other family members lived in the hall rent-free from when it was bought by the charity in 2010 until they were eventually all left the property by January 2019, following eviction proceedings which were started by an interim manager appointed by the regulator.
The commission found the household costs of the hall, including utility bills, phone and internet expenditure, were paid for by the charity without being reimbursed by those living there.
The regulator said that between 2011 and 2016 it had identified more than £30,000 in spending by the charity in relation to the hall’s power, phone and internet bills.
The hall had been acquired for restoration but the regulator concluded that there was no legitimate reason why the trustees and their family members continued to live in the property after the work was completed by the end of 2014.
“The inquiry found that the trustees did not act in the best interests of the charity by living on the premises, and the property was being treated as their family home," the commission's report says.
"This did not meet the objectives of the charity and constituted significant personal benefit.”
The report says the charity’s funds were used to purchase and maintain high value cars including Bentleys and Land Rovers that were registered in the names of individual trustees and “used for private benefit with no, or very little benefit to the charity”.
For example, the report says the inquiry identified the purchase of a Bentley Continental in July 2012 in part exchange of an older car of the same model plus a payment of almost £45,000 by the charity.
“The acquired vehicle was registered in the name of trustee Matthew Smith, rather than the charity’s name, and he was the registered keeper,” the report says.
“The inquiry further identified £40,883 was spent by the charity for service costs, DVLA plate transfers and insurance on the two Bentleys between 2011 and 2016 and a further £19,663 for costs on other pool cars (Range Rovers).”
In August 2016, the interim manager seized and sold the charity’s Bentley and the charity received £51,720 in relation to the sale.
“While it is not unusual for a charity to incur costs in relation to vehicles, there was no satisfactory explanation as to why the trustees needed to use high value cars or put them into the legal ownership of the trustees and, some or all this expenditure represents a misapplication of charity’s funds that gave rise to significant personal benefit,” the regulator’s report says.
The inquiry also found that between 2011 and 2016, Matthew Smith and Mariya Smith had together been paid more than £128,000 for services including managerial and repair work and cleaning.
The regulator concluded that these payments were in breach of the charity’s memorandum of association, which it said constituted misconduct and/or mismanagement.
“Furthermore, the level of payment received by both trustees was disproportionate particularly given the charity engaged in a relatively small amount of activity during the period between 2011 and 2016, and the trustees enjoyed the benefit of living at the hall with other family members rent-free,” the commission found.
The commission also concluded that about £38,000 of spending on entertaining, travel and subsistence had been incurred by the charity “partially or solely for the personal benefit of the trustees”.
It said there had been “serious misconduct and/or mismanagement in the charity’s administration and management” and in April last year Cyril, Matthew and Mariya Smith were all removed as trustees.
No action was taken against an unnamed fourth trustee who was appointed after the mismanagement set out in the report, the regulator said.
The charity was wound up by the interim manager and removed from the register of charities earlier this year.