The Charity Commission has disqualified a trustee and ordered the closure of four education charities he set up to gain personal benefit.
Its investigation into four charities set up by businessman Richard Gary Lorrison found that over £270,000 in gift aid payments had been transferred from Education for Gondar and Education in Sidama to Lorrison’s personal bank account.
The commission’s statutory class inquiry, which also investigated Education for Nyanza and Education in Western Province, Kenya, found that all four charities’ accounts had been signed off by Lorrison.
It concluded that Lorrison set up and used the charities to personally benefit from them and disqualified him from acting as a trustee.
The commission ordered all four of Lorrison’s charities to be dissolved, with only Education for Gondar yet to be removed from the register.
Its inquiry report says “the abuse of charities for unlawful purposes is absolutely unacceptable” and that it will share any evidence suggesting a possible civil or criminal offence with the police.
“Charities can be attractive to criminals to disguise unlawful activities,” it says.
“The commission will seek and support prosecution where they believe that criminal activity relating to maladministration or fraud occurs in respect of a charity.”
Misuse of funds
In August 2023, the regulator received nine charity registration applications linked to MWA Management Advisory Services Ltd, whose sole director and member is Lorrison.
It then identified four registered charities connected to Lorrison and his company and engaged with Education for Gondar, of which he was the chair, to establish whether there were any regulatory concerns.
Following this, it opened compliance cases into the three other charities before escalating them to a class inquiry in February 2024.
Its inquiry found that between 11 September 2018 and 4 July 2022, the only funds deposited into Education for Gondar’s account were HMRC gift aid payments totalling £187,829, which were immediately transferred into Lorrison’s private account.
It found that through 15 separate payments between 28 July 2021 and 10 June 2022, £82,889 was paid by HMRC in gift aid into Education in Sidama’s bank account, the value of which was also immediately transferred into Lorrison’s account.
The inquiry report says the bank statements for Education for Gondar and Education in Sidama “didn’t evidence either of them having received any donated funds or grants”.
“The information in the bank statements for both charities therefore provided no evidence that they received any donations for which a gift aid claim could have been made.”
It adds that none of the trustees of the four charities were able to provide evidence of charitable expenditure.
Regarding Education for Gondar and Education in Sidama, the report says the trustees were unable to explain why these payments had been made into Lorrison’s personal bank account.
“The class inquiry therefore considers that the gift aid payments were misappropriated by Lorrison.
“This is misconduct and/or mismanagement in the administration of the charities by the trustees and Lorrison.”
Lorrison used other trustees ‘without their knowledge’
The commission found that Lorrison had advertised the role of trustee – and in some cases offered payments – on job recruitment sites.
After interviewing prospective candidates and appointing them as trustees, Lorrison ceased all contact with them.
None of the trustees had any involvement with the four charities and were “completely unaware of the concerns raised by the investigation until the class inquiry engaged with them”.
“The class inquiry found that Lorrison had sole control over all the charities as well as their bank accounts,” the inquiry report says.
“The trustees were effectively trustees in name only. This is a failure of the trustees to fulfil their legal duties and responsibilities as trustees and is misconduct and/or mismanagement in the administration of the charities.
“It’s, however, clear that Lorrison used these individuals without their knowledge or involvement to give the impression that the charities had the appropriate governance and oversight.”
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