In a report published today (24th August 2023), the Charity Commission concludes that the former trustees of Care4Calais are responsible for several instances of misconduct and/or mismanagement.
The regulator is critical of the former trustees, finding that, over a number of years, the charity lacked appropriate governance structures, had poor internal financial controls and that its approach to handling complaints was inadequate.
The inquiry, which opened in August 2020, concluded that the charity's overall management and governance have now improved significantly as a result of the Commission's intervention and efforts made by the current trustees, including those appointed during the inquiry.
The Commission appointed an interim manager, who undertook an independent review of the charity's governance, administration and decision-making.
Poor internal financial controls
The inquiry is critical of the charity's financial management, notably a lack of suitable internal financial controls. Between October 2017 and August 2020, payments of over £340,000 were made to the personal bank account of one of the charity's now former trustees. Because of this, at the opening of the inquiry the Commission used its powers to restrict financial transactions between the charity and current or former trustees.
The inquiry found that these payments were reimbursements for charitable expenditure incurred by the trustee. The trustee in question explained that this arrangement saved the charity around £3,000 per year in foreign exchange fees. The inquiry concluded that while no funds were misused or misappropriated for private benefit, this arrangement was inappropriate, and put the charity's funds at undue risk.
Governance failings, poor complaint handling and dispute
The regulator found that between 2020 and 2021, Care4Calais operated with two trustees, failing to maintain the minimum number of trustees stipulated in its governing document. A dispute between board members left them unwilling or unable to resolve their conflict. This was found to be misconduct and/or mismanagement and the regulator remedied this by appointing additional trustees during the inquiry.
The inquiry also concluded that the charity's handling of complaints was inadequate. The charity failed to demonstrate that complaints were handled in an impartial, fair, open and transparent way and failed to maintain records of investigations. On at least one occasion, and in breach of the charity's own policy, one trustee handled a complaint about another trustee to whom they were related, failing to identify or manage the conflict of interest and/or loyalty which arose.
As part of an action plan issued in 2022, aimed at strengthening the charity's overall management and governance, the Commission directed the charity to strengthen its existing policy and create a complaints log.
Charity structure and conflicts of interest
Two of the former trustees were siblings, and the inquiry found little evidence to demonstrate that any past conflicts of interest or loyalty which may have existed had been appropriately managed. This was worsened by poor minute-taking. This amounted to misconduct and/or mismanagement.
The founder of the charity was a trustee and also the Chief Executive Officer (CEO). The interim manager recommended, to ensure a more balanced distribution of decision-making power, that the charity should recruit an independent CEO.
As part of the 2022 action plan, trustees were directed to recruit a CEO to head up the charity's operational activity. A new CEO joined the charity on 10 April 2023 and the charity continues to progress recommendations for improvement. During the inquiry, the founder stepped down.
Campaigning and political activity
As part of its inquiry, the Charity Commission reviewed the trustees' decision to issue judicial review proceedings to challenge the UK government's Migration and Economic Development Partnership with Rwanda.
It found the decision was properly made, adequately documented, and was within the range of reasonable decisions open to the trustees of this charity. The activity itself served to further the charity's objects, and the inquiry determined it was in line with the Commission's guidance on political campaigning.
Improved governance and management
The Commission's inquiry report makes clear that the new trustee board, which includes trustees appointed by the regulator, has implemented the 2022 action plan and introduced significant improvements to the charity's management, governance and operation. This includes improvements to its complaints handling process.
The regulator has communicated to the charity that it expects improvements to continue, through the implementation of the extensive advice and guidance given throughout the inquiry.
Orlando Fraser KC, Chair of the Charity Commission, said:
Our inquiry found that, over a significant period of time, and following a rapid expansion of its operations, Care4Calais was not managed well. Its funds were put at risk, and there was serious misconduct and/or mismanagement by the former trustees.
I am pleased that the Commission's intervention has led to significant improvements to the charity's governance, not least thanks to the work of the interim manager and new leadership. The charity is now in a much better position to deliver on its purposes. We have issued the new trustees with advice and guidance, including in relation to its international activities, so the charity is managed in line with the law and our regulatory expectations into the future.
He added:
I am very aware that this charity's work has generated attention and controversy. We will not shy away from examining concerns raised about any charity and will take strong action where necessary. However, as a fair, balanced and independent regulator we will not be influenced by political debates, nor should we stop charities from furthering their purposes in line with the law set down by Parliament. It is for the Commission to assess whether trustees are meeting their responsibilities - and that is what we have done.
The full report detailing the findings of this inquiry can be found on gov.uk.
Notes:
- The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its purpose is to ensure charity can thrive and inspire trust so that people can improve lives and strengthen society.
- Care4Calais was registered in 2016 and its work includes providing aid and support for displaced people in Belgium and France and asylum seekers in the UK.
- The inquiry opened in August 2020 over concerns about payments to connected parties, detailed in the charity's accounts. The regulator also identified concerns around whether those acting as trustees were validly appointed and around the former trustees' decision-making.
- A decision was made to appoint an interim manager ('IM') under section 76(3)(g) of the Charities Act 2011 ('the Act') on 29 July 2021
- The inquiry made an order under section 76(3)(b) of the Act on 9 March 2022 and appointed five trustees for a 9-month term.
- The charity was issued with an action plan under section 84 of the Act on 10 March 2022.
- Our approach to complaints is outlined here: Complaints about charities - GOV.UK (www.gov.uk) The Commission does not act as a complaints service looking at all complaints on behalf of complainants. It assesses and identifies if there is a regulatory issue or concern that requires its involvement.
