• Failed to file returns for years
• Trustees could not account for £51,000
The United Kingdom’s Charity Commission has published a report which indicted the charity run by the Redeemed Christian Church of God, RCCG, House of Prayer for All Nations, UK, of maladministration.
The Commission consequently removed it from the register of charities in October 2019.
Below is the report dated February 2020:
Redeemed Christian Church of God (‘RCCG’) New Life Assembly (House of Prayer for All Nations) (the charity) was registered with the Commission on 18 January 2001. It is governed by a declaration of trust dated 25 October 2000. The charity’s objects are the advancement of the Christian faith worldwide and the relief of poverty.
The charity was removed from the register of charities (‘the Register’) by the Commission on 1 October 2019 as it had ceased to operate.
Further details about the charity can be found on the register of charities.
BACKGROUND AND ISSUES UNDER INVESTIGATION
The charity had failed to file its statutory accounts for the financial years ending (‘FYE’) 31 December 2011 and 31 December 2012. As a result, on 6 May 2014 the charity was added to the Commission’s ‘double defaulter’ inquiry into charities that were in default of their statutory obligations.
These accounts were eventually filed with the Commission and the charity was taken out of the double defaulter inquiry on 26 August 2014, however, the charity was again in default with regard to submission of its accounts for FYE 31 December 2013.
As a result of the repeated non-compliance in failing to submit accounting information to the Commission, the Commission opened a statutory inquiry (‘the inquiry’) into the charity under section 46 of the Charities Act 2011 (‘the Act’) on 10 December 2014 to examine:
• the administration of the charity by the trustees, in particularly in relation to whether the trustees have fulfilled their legal duties and responsibilities as charity trustees
• the failure of the trustees to fulfil their statutory duty to submit annual accounts, reports and returns for the financial year ending 31 December 2013
• the financial management of the charity to determine whether the trustees have failed to properly manage the charity’s funds and therefore, have put the charity’s funds at risk
The inquiry was closed with the publication of this report.
The administration of the charity by the trustees, in particularly in relation to whether the trustees have fulfilled their legal duties and responsibilities as charity trustees
The inquiry found that there were no trustees acting in the administration of the charity. Trustee A did not respond to any correspondence from the Commission. It was concluded that Trustee A did not act in the administration of the charity and was subsequently removed as a trustee by the Commission. Trustee B claimed to have resigned in 2010 and that he had not been involved with the charity.
Trustee C informed the inquiry that he had moved to Nigeria and resigned many years prior to the opening of the inquiry, possibly in 2011. Whilst the inquiry has seen no evidence of the resignation, the inquiry found no evidence of his involvement with the charity.
Trustee B and trustee C both asked the Commission to amend its records to show they were no longer trustees of the charity and the Register was updated accordingly in February 2019.
The inquiry was informed that an individual had been acting as the charity’s administrator (‘the Administrator’), was also a trustee of a separate incorporated charity, the RCCG New Life Assembly (1147980) (‘the new charity’), which has identical objects to the charity. The charity will be referred to as ‘the old charity’ for the remainder of this report to avoid confusion between these two separate entities.
The Administrator acted as the old charity’s point of contact for the inquiry. He advised that it was the intention to merge the old charity with the new charity but that this had become difficult to arrange. He informed the Commission that the old charity was kept open so that it could process gift aid claims, however, the Commission found that it was not operating when the inquiry was opened.
The failure of the trustees to fulfil their statutory duty to submit annual accounts, reports and returns for the financial year ending 31 December 2013.
The inquiry found that the absence of trustees acting in the administration of the old charity, and the lack of effective governance arrangements, had contributed to the old charity having failed to file the accounts for FYE 31 December 2013. The inquiry was informed that the Administrator had taken on the responsibility for working with the old charity’s accountant to file the outstanding accounting information.
The accounts for FYE 31 December 2013 which were filed on 17 April 2015 following the opening of the inquiry showed a material difference of £51,000 for income and expenditure.
Trustee B informed the inquiry that his signature had been used on the old charity’s accounts for FYE 31 December 2013, despite having not seen them prior to their submission. There is disagreement between Trustee B and the Administrator as to whether or not Trustee B was informed that his signature was going to be used.
The financial management of the old charity to determine whether the trustees have failed to properly manage the charity’s funds and therefore, have put the charity’s funds at risk
The inquiry found that the absence of trustees and effective governance arrangements meant that the old charity’s property was not properly managed, which put its funds at risk.
The inquiry identified that £50,000 had been paid to a pastor (‘the Pastor’) of the old charity on 10 April 2013, which was authorised by ‘the Administrator’. As the Administrator was not a trustee, this payment was in breach of the governing document which states that the trustees have control of the charity’s funds. The inquiry found that inadequate financial controls failed to ensure that the funds paid to the Pastor were spent on the purposes of the old charity.
The Pastor could only evidence that £35,000 had been spent in furtherance of the old charity’s objects following enquiries made by the inquiry. However, the inquiry found that there has been subsequent correspondence with the Pastor and the Administrator (on behalf of both Charities) concerning repayment of the money that is owed.
On 14 May 2019 the inquiry was provided with a copy of a draft repayment agreement between the Pastor and the Administrator, which requires that £250.00 per month will be repaid by the Pastor to the new charity until the money owed is repaid in full.
The inquiry concludes that the absence of any charity trustees taking legal responsibility for and management of the old charity is the primary cause of the problems identified by the inquiry. This left the old charity’s property at risk of misuse. Due to the time that has passed since the departure of the trustees, it has not been possible to establish the extent to which responsibility for these failings can be attributed.
REGULATORY ACTION TAKEN
On 2 March 2015 the inquiry directed the trustees of the old charity to file its necessary accounting information for FYE 31 December 2013 under section 84 of the Act.
The inquiry completed two interviews with the Administrator, the first of which was also attended by Trustee B. The inquiry used its information gathering powers under sections 47 and 52 of the Act to two of the old charity’s trustees, the Pastor, the old charity’s bank provider, the Administrator and the old charity’s accountant to provide information and documents to the inquiry.
On 15 May 2019 Trustee A was removed as a trustee of the old charity under section 80(1)(e) of the Act on the basis that he did not act in the administration of the old charity.
On 8 August 2019 the Administrator was provided with authorisation under section 105 to enter into an agreement on behalf of the old charity with the Pastor concerning the repayment of funds owed to the old charity.
On 1 October 2019 the old charity was removed from the Register under section 34(1)(b) of the act on the basis that it did not operate.
ISSUES FOR THE WIDER SECTOR
Charity trustees are responsible and accountable for the overall management and administration of the charity, and this should not be left to other individuals. Trustees are responsible for following the rules in the governing document for how trustees can resign, and for ensuring that a minimum number of trustees to take decisions in the administration of the charity.
Trustees must comply with statutory accounting and reporting requirements to ensure accountability and that it is complying with the law.
Internal financial controls are essential to help charity trustees:
• meet their legal duties to safeguard the charity’s assets
• administer the charity’s finances and assets in a way that identifies and manages risk
• ensure the quality of financial reporting, by keeping adequate accounting records and preparing timely and relevant financial information