The Charity Commission has launched a statutory inquiry into a London-based charity following concerns that the charity is owed £2m by a company it is associated with.
The Commission first opened an operational compliance case into the charity, the Reb Moishe Foundation, in December 2014 when HM Revenue and Customs raised concerns about a £2m loan made in 2006 by the charity to a company, property developers Gladstar Limited, of which the current sole trustee, Jacob Plitnick, is now a director.
The charity’s accounts for the year ending December 2013 show that £2.3m is owed to the charity by the company.
The compliance case revealed that the company which received the loan is “running at a significant deficit”, and that the interest payable to the charity has been reduced. The Commission also became concerned about an “apparent lack of charitable expenditure, contradictory information provided in the charity’s accounts.” It is also concerned that the charity does not have enough trustees be effective, as one of the two trustees died recently.
These factors prompted the regulator to open a statutory inquiry into the charity on 1 May 2015. The announcement of the inquiry was delayed “due to the involvement of another agency”.
The Commission will investigate the loans made by the charity, and whether they were in furtherance of the charity’s objects. It will also look at decisions by the charity’s trustees, particularly in regards to the loan to the connected company, and whether this was done in the charity’s best interests.
The regulator will also look at whether trustees received “unauthorised private benefits and whether conflicts of interest have been properly managed”, and whether trustees complied with legal duties in relation to the management and control of the charity’s administration.
Since the inquiry opened, the Commission has used its powers to direct the charity’s trustee to take “certain immediate steps in connection with the outstanding loan and to direct the charity’s accountant to provide information”.
The charity has been significantly late filing its accounts for the last three years, with the Commission never receiving its accounts for the year ending December 2010.
Plitnick told Civil Society News that the charity is doing “everything possible” to correct any neglect that the foundation has had.
