Human Appeal has been criticised by the Charity Commission after trucks were seized by terrorists and the charity breached tax law in Greece and Turkey.
In 2017 there were two incidents that involved the charity’s supplies falling into the hands of terrorists, but the charity did not file serious incident reports with the Commission in a timely manner.
During the course of its inquiry the regulator also established that there were breaches of international tax rules and insufficient scrutiny of large donations.
The Commission published the findings of its statutory inquiry last week.
Human Appeal accepts the findings. It has made improvements, and its new chief executive said “transparency and accountability” is now “at the heart of what we do”.
Lack of trustee oversight
The Commission’s report finds that trustees had poor oversight of activity and did not challenge its executive leaders.
“The inquiry found that although quarterly trustee meetings took place, and minutes were kept, the minutes did not evidence the then trustees being sufficiently inquisitive, with limited evidence of the then trustees probing the information provided by the executive,” the report says.
When the charity’s warehouse in Idlib, Syria, was temporarily seized by Hay’at Tahrir Al-Sham, a proscribed terrorist organisation affiliated to Al-Qaeda, in early October the full trustee board was not informed until late November.
The charity also failed to report the incident to the Commission “promptly”, the Commission’s report says.
In 2017 Human Appeal was a large charity with an annual income of £36m and operations in 24 country.
Steve Roake, head of compliance visits and inspections at the Charity Commission, said: “Good governance is not a bureaucratic detail – it underpins the delivery of a charity’s purposes to the high standards expected by the public.
“Our inquiry found that the then trustees of Human Appeal did not have the oversight needed regarding the activities of their charity.”
Breaches of tax rules
Human Appeal’s former auditors had highlighted breaches of tax laws in Greece and Turkey, where funds flowing through those countries were not properly declared.
An auditor report found that in 2016 the charity couriered £39,500 in cash from the UK to Greece, a practice the regulator has previously told charities to avoid.
“The then trustees told the Inquiry that there was no intention to deceive the Greek authorities and cash couriering had been used due to difficulties obtaining a Greek bank account during a banking crisis and difficulties withdrawing cash in Greece,” the inquiry report says.
Greek authorities agreed that the charity could pay €19,348.08 (approximately £17,000) to cover the unpaid taxes and resulting fines. Human Appeal also incurred professional fees of £41,947.51 to reach this deal.
Another auditor report found: “$753,000 had been paid to employees of the charity based in Turkey which had not been declared to the relevant authorities since the beginning of the charity’s operations in Turkey. The charity avoided sanction or penalty for these breaches from the Turkish government.”
Large donations from UAE
In 2016 a donor from the United Arab Emirates (UAE) donated nearly $2m towards one of the charity’s programmes.
“The inquiry found that no due diligence was completed by the charity on the UAE donor despite the significant sums involved and the direct payments to suppliers,” the Commission said.
This also amounts to “mismanagement”, the Commission said.
Human Appeal: ‘We have put transparency and accountability at the heart of what we do’
The Commission acknowledged progress made by the current trustees and said the charity is now in a “stronger position going forward but there remain improvements to be made”.
The charity has put new leadership in place since the investigation began. Last week its chief executive promised to “complete the process of transforming Human Appeal into a model charity”.
Mohamed Ashmawey, who joined Human Appeal as chief executive in 2019, said: “Human Appeal has been transformed by the fundamental changes that we have implemented over the last three years, with the full support of the current chair who commissioned the original independent inquiry and proactively alerted the Charity Commission in the weeks after his appointment in 2017.”
“Several issues raised in the Commission’s report were already being addressed when the inquiry launched. We have subsequently addressed other issues and ensured continued attention for issues which demand an ongoing focus. Beyond this, we have fostered a culture of zero tolerance for breaches of our policies and strive for continuous improvement in all we do.”
Human Appeal also welcomed the guidance it has received from the Commission.
“We will complete the process of transforming Human Appeal into a model charity. As we move on, we will continue to put transparency and accountability at the heart of what we do and now focus all our efforts on saving lives and supporting vulnerable communities in complex and challenging environments around the world,” Ashmawey added.
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