The Charity Commission has found that trustees of a south London church committed serious misconduct and mismanagement by giving £1 million in unsecured loans to a Dubai-based property developer.
According to ThirdSector, no paperwork was provided, and no guarantees were given for what the funds would be used for, or how interested would be earned.
The Citygate Outreach Centre is based in Beckenham, south London. On March 22nd 2021, it was placed into a Charity Commission double defaulter class inquiry, after failing to submit its annual report on time.
Two months later, the Commission received the accounts from both 2019 and 2020. It found that £948,450 had been loaned to a property developer in Dubai, allegedly to fund a real estate project.
The property developer partially repaid some of the money in 2018 – however a balance of £915,450 remained outstanding, not including interest, in August 2021.
The regulator said that “significant related party transactions” had taken place between the charity, former trustees and connected individuals.
It continued: “Accounts also showed that the chair of trustees and his wife were paid for their role as pastors in the church and for which they received significant increases in salary in the financial year ending 31 March 2019.”
By March 2021, almost 80 payments had been made to the property developer.
The church had only two trustees at the time. The Commission said they both failed to inquire at “the most basic level” regarding how loans were being used.
Through a settlement agreement with the developer, more than £500,000 has been recovered. A new board of trustees has since been appointed.
Amy Spiller, head of investigations at the Charity Commission, said: “Following our intervention, and appointment of a new trustee board, the charity is improving how it is run and has already recovered more than half of the loaned funds.
“We are satisfied all concerns raised as part of the inquiry have been addressed.”