The Office of the Scottish Charity Regulator (OSCR) has concluded that the former chief executive of the King’s Foundation had put the charity at “substantial risk” and that its governance had failed to meet standard requirements.
OSCR’s investigation into the foundation, formerly known as the Prince’s Foundation, found that the charity’s former chief executive made non-charitable expenditure, used uninsured artwork on behalf of the charity and received unauthorised payments.
Investigators criticised transactions between the charity and investment firm Havisham Assets Limited, the purchase of a home furnishing item for a former trustee and the actions of a former chief executive between 2013 and 2015.
It concluded that “it was unclear how those transactions were in the interests of the charity” and that monies had been repaid to the charity.
During the course of OSCR’s inquiry, allegations also arose that suggested that Michael Fawcett, then chief executive of Prince’s Foundation, offered to help Saudi billionaire Mahfouz Marei Mubarak bin Mahfouz to get a knighthood and UK citizenship in exchange for donation.
Subsequently, the Metropolitan Police carried out an investigation as Fawcett temporarily stepped down from his position. The investigation concluded in August 2023 and no further action was taken.
Uninsured artwork
The charity borrowed high-value paintings from a donor in 2016. But despite knowing that the insurance for the artwork lapsed in 2017, the former CEO and a former member of the executive team failed to inform the board until a review of the artwork was carried out in 2019.
The former CEO told the inquiry that due to the “difficult and chaotic nature of the correspondence” with the art donor, he was not “sufficiently clear” about the situation.
He admitted that it was “in part due to a failure of adequate communication and organisation between him and his former colleague”.
The investigation concluded: “The charity was exposed to significant risk due to the paintings not being insured. It was wholly unacceptable for the charity to have been placed in this position.
“While OSCR notes the position of the former CEO regarding the confusion and misunderstandings in relation to the insurance status of the artwork, it is unclear when the former CEO realised that the insurance had lapsed and steps had not been taken to rectify the situation.”
Unauthorised payments
The investigation found that the former CEO’s personal events company was in receipt of payments from the charity via a third-party company, which was a violation of a prior agreement with the board.
It found that not all of the sums paid to the third-party company were then paid to the former CEO’s events company.
It further revealed that internal communications of a reference made to a grant being received from another charity were intended to contribute to the former CEO’s salary.
“While the grant paperwork did not suggest the sum was to be paid in addition to the former CEO’s basic salary, it did not expressly prevent it,” the report stated.
It stated that when the ongoing payments were identified, the third-party company returned all the sums received and the former CEO agreed to repay the previous years’ sums.
Full repayment was made in December 2020, according to the report.
It concluded: “OSCR accepts that it is possible that the payments represented work genuinely carried out by the CEO’s events company. However, it is inappropriate for such payments to be made without formal agreements being in place.”
Governance ‘not always up to standard’
It concluded: “The inquiry found the historical governance of the charity had not always been up to the standard required. This finding is in relation to the historical approach to decision-making and record-keeping.
“However, the inquiry did not find evidence of misconduct by any of the former or current trustees who were in office at the time."
In terms of the former CEO’s failure to inform trustees about the uninsured artwork, the report stated: “It was unacceptable for the former CEO not to brief the charity trustees on these issues as soon as they arose.
“By not doing so the former charity trustees’ ability to react to the risk was hindered.”
A spokesperson for the King’s Foundation told Civil Society: “The findings of this report into historic activity at the organisation have been noted by the King’s Foundation.
“As the report acknowledges, the Office of the Scottish Charity Regulator (OSCR) is satisfied with the improvements made by the King’s Foundation in recent years, including the introduction of new and robust governance practices.
“Following the conclusion of OSCR’s investigation, we look forward to furthering the impact of our charitable work and achievements as we enter the new year.”
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