The commission opened a statutory inquiry into what was then Muslim Aid in November 2013 over concerns of significant financial loss to the charity, serious governance failures, poor financial controls and loss or misuse of charitable funds for improper purpose.
The inquiry was prompted by a serious incident report from the charity in 2012, setting out “financial irregularities” and “unmanaged conflicts of interest” in two of the charity’s field offices in Africa. The concerns were originally dealt with as part of a regulatory compliance case, but the commission increased its engagement when the charity’s reassurances actually ended up highlighting more concerns about its financial management, due diligence, monitoring and oversight of its field offices.
The regulator issued the charity with an action plan in 2015, instructing it to implement actions to improve governance and financial management. Although the former trustees agreed and appointed an experienced CEO, they only complied with a few of the actions.
The investigation recognised that the charity did carry out vital relief work around the world, sometimes in very difficult conditions. And while the inquiry found no evidence of any illegal funding of any proscribed organisations, the trustees could not demonstrate that they had ensured the charity had adequate due diligence and monitoring arrangements in place to show all its funds had been properly applied.
The commission will continue to hold the new trustees to account for putting things right and in October 2016, it used its powers to appoint an interim manager who worked alongside the newly appointed CEO to complete a full governance and infrastructure review of the charity.
Following that, a new senior leadership team was recruited. The charity was incorporated into a new charitable incorporated organisation, named Muslim Aid, with its assets and liabilities transferred. MA 1985 has since ceased to exist and has been removed from the charity register. In addition a new trustee board was appointed on 31 January 2018.
Harvey Grenville, head of investigations and enforcement at the Charity Commission, said: “The public rightly hold charities to higher standards of behaviour and conduct. And when they donate to charity, the public have a legitimate expectation that their monies will be carefully protected and applied in the best interests of the people the charity is set up to help.
“I am pleased that the new charity, is making significant progress. But there are no quick fixes to the systemic problems our inquiry identified. The new trustees will need to continue their hard work in providing robust oversight and control of the charity’s operations if they are to meet our expectations as regulator and the expectations of the public who support Muslim Aid’s aims.”