11 March 2011

The Charity Commission, the independent regulator for charities in England and Wales has today published a report on its inquiry into the charity People’s Opportunity to Work Trust (“POW Trust” – registered charity number 1073917).

The charity’s objects are to assist in the rehabilitation of ex-offenders and to relieve poverty among people who have suffered a legal restriction on their liberty.

The Commission opened an Inquiry in November 2002 after it received a complaint alleging that large sums of the charity’s money were unaccounted for and that improper transactions between the charity and its connected trading companies had taken place.

The Inquiry found that large sums of money had been transferred between the charity’s bank accounts and the bank accounts of its trading subsidiaries. These transactions were not properly accounted for in the charity’s accounts. The Inquiry also found that unauthorised payments were made to the charity’s General Secretary. These and other payments were significantly higher than the total income and expenditure reported in the charity’s accounts.

The Inquiry found little evidence of charitable activity. It concluded that there had been misconduct and mismanagement in the administration of the charity and that the then trustees failed to ensure that funds held in the charity’s name were used for charitable purposes.

During the course of the Inquiry, the Commission obtained information suggesting criminal activity on the part of individuals involved in the charity. For this reason, the Commission formally referred evidence to the Metropolitan Police. The Metropolitan Police’s criminal investigation resulted in a successful prosecution in May 2010, which was based in part on evidence obtained by the Inquiry. Because of the criminal proceedings, the results of the Commission’s Inquiry, which concluded in February 2005, were not published at the time to avoid prejudice to those proceedings.

The Commission’s Inquiry highlighted issues for the wider sector including trustees’ legal duty to account for funds that are spent in the name of the charity. This means they must ensure that money is spent in furtherance of the charity’s objects, and that adequate records exist to evidence this.

The full report is available on the Commission’s website.

Full details of the investigation can be found on the Charity Commission’s website. For further information, please contact the press office.

PR 13/11

Notes to Editors

1. The Charity Commission is the independent regulator of charities in England and Wales. See www.charitycommission.gov.uk for further information or call our contact centre on 0845 300 0218.
   
2. Our mission is: to ensure charities’ legal compliance, enhance charities’ accountability, encourage charities’ effectiveness and impact and to promote the public interest in charity.
3. The Commission conducts two kinds of investigation cases. Most concerns are dealt with through investigations called ‘regulatory compliance cases’. However, in cases of significant risk and more serious regulatory concern we may open a statutory inquiry under section 8 of the Charities Act 1993. The decision to open a statutory inquiry will be based on a number of factors, including evidence of serious suspicion of misconduct or mismanagement in the administration of the charity and/or risk to property. The criteria we use are set out in our Risk and Proportionality Framework for the Commission’s compliance work on our website.
4. More information about the Charity Commission’s Compliance Division can be found in Charities Back on Track, a report on the themes and wider issues arising from the Commission’s compliance work. This can be found on the Commission’s website.

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