A former chair of the Ethnic Minority Foundation has been accused of misappropriating £625,000 of the charity’s money.
But Lord Bhatia is suing the EMF for unfair dismissal and has launched separate proceedings to recover money that he claims he lent to the charity.
A BBC investigation has revealed that Lord Bhatia, a peer who was suspended from the House of Lords in 2010 after wrongly claiming thousands of pounds in Parliamentary expenses, offered to take over the role of chief executive of the charity in 2009 when Krishna Sarda left to monitor projects in India.
At the end of 2012, EMF conducted its own internal investigation into Lord Bhatia’s conduct, and passed on its draft findings to BBC Newsnight.
Current chair, Anil Bhanot, a chartered accountant, told civilsociety.co.uk: “He was just doing things as if he was running his own personal business.”
Bhatia lawyers: he is owed money from EMF
Lord Bhatia’s lawyers claim that the charity has misled the BBC, saying that the EMF owes him £250,000. Bhanot insists that this money was not a loan from Lord Bhatia to the charity, but was injected into the charity by the former chair to cover up his own mismanagement.
According to EMF’s investigation, Lord Bhatia was using the charity’s money to pay for, among other things, a private chauffeur whose salary continued to increase despite recommendations from Bhanot - the charity’s treasurer at the time - to make serious cutbacks.
Bhanot said he became worried about the charity’s financial situation in October 2012, so went directly to see the accountant. It was then that he realised the scale of the charity’s mismanagement.
When the trustees confronted Lord Bhatia in December 2012 - when he was a trustee but not chair - he immediately resigned.
Bhatia CEO position not formalised
Trustees from the charity claim that Lord Bhatia’s position of acting CEO was never formalised.
The EMF is a charity which aims to aid the advancement of education, the furtherance of health and the relief of poverty, distress and sickness.
Former MP John Barrett, currently a trustee of the charity, told Newsnight: “It looked like there was a cash crisis approaching, well that shouldn’t be happening as there should have been plenty of money in the bank. And it came clear that far more money had been going out of the charity than could be explained.”
Reports have also suggested that during 2009 and 2010 Lord Bhatia was claiming his mileage expenses from the EMF, while at the same time submitting claims to the Lords for journeys to Westminster. This resulted in payments of more than £1,500 from the taxpayer.
A forensic accountant was brought in to investigate and EMF passed the draft findings on to BBC Newsnight.
Commission talking to trustees
The Charity Commission confirmed that it had an open compliance case against the charity, following concerns reported by its trustees.
It said: “As this case is ongoing, we cannot comment in detail on its progress.
“However, we can confirm that we have been meeting with the trustees and issued corrective advice to ensure they improve the charity’s governance, in particular its financial controls. This will help prevent future abuse. We have also made clear that the trustees must report any suspicions of fraud to Action Fraud.”
The Charity Commission is continuing to have meetings with the trustees to ensure the charity is conducting a thorough investigation into the payments and benefits received by the former trustee.
Bhanot: 'Trustees don't know'
Bhanot also told civilsociety.co.uk: “People always say, why didn’t the trustees pick up on this before but, the point is, you needed somebody like an accountant to be looking at the figures from the outside, otherwise trustees don’t know.
“They are given quarterly figures and they don’t know what is going on behind the scenes but as a treasurer I got to know what is going on behind the scenes and helped bring this out.”
