The Charity Commission’s 2020 statutory inquiry into Muslim Aid has finished, more than a decade after it began to probe the charity.
It concluded that the charity, which has an income of around £20m, had missed deadlines to improve governance and financial controls.
But despite previous failings, the Charity Commission found that the trustees had complied fully with the latest action plan it had set trustees.
A Muslim Aid statement said the charity was looking forward to a positive future focusing on the needs of beneficiaries.
It added: “We are very grateful to the charity tribunal whose assistance was sought twice by Muslim Aid and the Charity Commission’s internal review process, which upheld a challenge to a Commission decision in Muslim Aid’s favour.”
2010 inquiry
Muslim Aid had been the subject of regulatory intervention by the Commisson in 2010 and 2012, which led the Commission to open a statutory inquiry in 2013.
Trustees were issued an order with which they did not comply, and the 2013 inquiry appointed an interim manager in 2016.
A recommendation was for Muslim Aid to be incorporated into a CIO, which resulted in the creation of a new charity and a transfer of Muslim Aid’s funds and property to it before the previous organisation was dissolved and removed from the register.
The new charity was established with a new trustee board.
2018 action plan
The Commission monitored the new trustees’ progress against a 2018 action plan and met on 14 February 2020 to discuss the Commission’s serious ongoing regulatory concerns.
During the meeting, trustees informed the Commission that the charity was not in the position they thought it had been and they faced significant challenges as a result. The trustees stated they were not confident of meeting the action plan deadline of 24 April 2020.
The charity’s independent auditor qualified the accounts for the financial year ending 31 December 2018 which showed a significant deficit in unrestricted funds, in the region of £2.3m.
Additional regulatory concerns identified also included serious incident reporting regarding the charity’s overseas country offices.
Following the final progress report, submitted on 23 April 2020, the Commission assessed the information submitted and concluded that the trustees had not fully complied with the 2018 action plan.
Nonetheless, the regulator acknowledged that considerable progress had been made by the charity to address a number of issues relating to its governance and management.
2020 inquiry
In 2020 the Commission opened a statutory inquiry to consider regulatory concerns in relation to the trustees’ failure to comply fully with the 2018 action plan, the financial position of the charity and whether it remained a going concern, the trustees’ governance and management of the charity and reputational risk to the charity.
On 6 November 2020, trustees appealed the Commission’s decision to open the 2020 inquiry but following an agreement between the parties, the charity withdrew its appeal on 15 August 2022.
At the time the 2020 inquiry was opened, the trustees had reported several serious incidents, in 2019 and 2020, relating to its country offices. These included alleged fraud, financial loss, legal action and safeguarding concerns.
During the 2020 inquiry, the trustees reported a serious incident and launched an internal investigation following the discovery of suspicious cash withdrawals at one of its country offices.
An internal investigation found weaknesses and failures to follow financial policies and procedures which had allowed an in-country member of staff to falsely draw cheques for cash, resulting in a loss of approximately £4,000. The member of staff concerned was dismissed as a result.
A separate country office, which closed in 2018 due to operational and regulatory difficulties, was also subject to a legal claim regarding the failure to pay a partner organisation for work completed.
The court in the now-closed country office’s jurisdiction awarded around £600,000 to the partner.
2022 action plan
The inquiry found trustees between 24 April 2018 and 24 April 2020 did not make sufficient progress to fully comply with the 2018 action plan before the deadline.
The Commission acknowledged that the trustees had faced challenges fully complying with the 2018 action plan and considered mitigation in that they had faced unforeseen challenges during the period, most notably in staffing.
Nonetheless, the regulator noted that the trustees had not requested an extension to the final deadline.
On 30 May 2022, the 2020 inquiry issued an action plan under section to the trustees. This set out the outstanding actions, from the 2018 action plan, which had not been substantially or fully complied with and additional actions following regulatory concerns identified by the 2020 inquiry. A deadline of 1 November 2022 was given.
The inquiry has now reviewed the evidence and found that the trustees have complied fully with the 2022 action plan and communicated this to the trustees on 25 August 2022.
Muslim Aid 'much stronger and more robust than ever'
In a statement, Muslim Aid said it is pleased that the Commission has closed its statutoryi nquiry without any further regulatory action, “thereby bringing an end to almost a decade of regulatory intervention into the charity”.
The charity added: “The final report shows no findings of mismanagement or misconduct. The Commission did not find the need to impose sanctions on Muslim Aid or any of its dedicated trustees and staff, both past and present, who have worked tirelessly throughout such challenging circumstances to affirm the integrity of one of the UK's oldest Muslim charities.
“We are very grateful to the charity tribunal whose assistance was sought twice by Muslim Aid and the Charity Commission’s internal review process, which upheld a challenge to a Commission decision in Muslim Aid’s favour.
“Muslim Aid is now much stronger and more robust than ever. It is looking forward to a positive future focusing on the needs of our beneficiaries and delivering on the donors' trust in our charity.”
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