Trustee who cannot be trusted

[MidxGal]

Hi All,

I am the chairperson of a UK registered charity created for the development of my primary school, which is in a bad state. It is in a country in Asia. Funds were collected for the renovation of a building.

A fellow trustee had offered the work to a contractor whom he had known earlier. No tenders were called. Other (3) trustees were not consulted. He coerced the treasurer to send (wire) the funds to the contractor,and the money was sent.

Now the work is complete. The contractor refuses to send a receipt of payment and a breakdown of how the money was spent. The trustee is now bluffing by saying that it is the custom of the country.

What should I do? Please help.

So the trustee instructing the work had no authority to do so, due process wasn't followed and the treasurer was useless? I think the ship has probably sailed as you have no leverage now you've paid, but you need to read up on charity governance and act. There may be issues with bribery and corruption as I'm sure you're aware. There needs to be an investigation, but it shouldn't have got this far. It sounds as though all the trustees have failed in their duty.

The saving grace here is that the work is complete.

I think you probably all need some bribery act training and to read up on the duties if a trustee. And to learn to stand up to this individual. None of the other trustees did anything? And the treasurer just paid up? I'm not sure that any of you are fulfilling your role obligations. And you are also leaving yourselves exposed.

Then the trustee needs to their power to be removed from the trust?

At least the work was done.

Sack the trustee that arranged for the work to be done for starters - gross misconduct should do it.

Does your charity have written rules of engagement etc? If not, write some to stop this happening again. And then training for everyone, covering the fact that a U.K. registered charity is subject to U.K. laws.

Yes done but to what standard? If no due diligence done could be risky - I suppose warranties completion certs not forthcoming 👍🏿☘️

There should also be a process in place whereby one trustee cannot make a payment above a nominal amount without the documented agreement of a second trustee - banking software has the facility for two signatories to authorise online payments.

Are the other trustees family members? That would add a layer of complexity and emotional involvement.

Is the work complete and done to a satisfactory standard?
Without knowing the country, and its laws, difficult to comment on what can be done, but if it’s a country where corruption is endemic, probably not a lot tbh.

The charity is registered in the UK and the trustee exceeded their powers. He or she could be personally liable for the full cost of the contract but you're dealing with a complex matter across borders. You really need a legal expert to advise.

OK, damage has been done.

What steps should I take next to rectify the situation?

I am apprehensive about the accounting report, due soon.

Refer to the Charities Commission and your auditors (if you use auditors). You're now aware of a breach of rules and you should protect yourself and the charity by doing things by the book now.

Thank you all for giving advice on this matter.

I have more news!

This obviously corrupt trustee is the actual contractor, and he employed his friend builder in the country overseas. I discovered it in a coversation with a friend yesterday.

He had also collected funds from his friends and relatives without the knowledge of the charity trustees, and asked them to wire the money directly to his builder.

A huge amount was involved. We do not know the exact amount.

I am thinking of demanding the profit he made to be paid back into the charity account.

Obviously he'll not admit the crime and will refuse to pay back.

I can go to police, but I have little evidence.

What now?

My SIL had this. Her father a very wealthy man in India died. She had been left three houses and a lot of money in his will. Her mother and brother who lived there grabbed the lot. She tried legally for three years to get it back. Was a waste of time, she gave up in the end.

I would seek advice from the charities commission let them run with it @MidxGal

Take the evidence you have to the police and the charity commission.

Has someone checked that the work has actually been done and completed to the expected standard? Next time, due and stated process only

Look up the charity commission whistle blowing procedure and make a report asap.

There are very limited ways in which a trustee can receive money from the charity and this doesn't seem to be within the rules.

Look at the charity's constitution and see how trustees can be removed.

The other trustees need to make clear to the treasurer that this type of payment should never be made and consider replacing the treasurer. Is there a chance the treasurer was given money by the trustee?