In my blog yesterday, I responded to the inept suggestion from Margaret Hodge that the current work of the Charity Commission should be passed to the Tax Office (HMRC) because she believes that they could do a better job. Whilst I was working on my blog,  journalists from Newsnight must have been hard at work on their own story about problems connected with charities. In their case this was a story to uncover the appalling behaviour of a man who was appointed to the House of Lords under the People’s Peers initiative. Lord Bhatia as the Daily Telegraph has reported this morning is accused of stealing £625,000 from a charity he founded in 1999. It is clear from a brief reading of the accounts on the charity commission website that this charity has some questions to answer. Couple these questions with the information raised by the journalists and the indications that the charity was poorly governed are all too evident.

As founder of the charity, Lord Bhatia has clearly dominated its work for 15 years which alone raises all sorts of questions regarding its effectiveness and his ability to let go. That he was able to transfer his role from being its Chairman to a pseudo Chief Officer role as Newsnight report suggested, without any apparent scrutiny or challenge is clearly disturbing. Beyond this he appears to have recruited a family member to the organisation, and used the charity to pay for his transport costs at a level which far exceeds any test of reasonable arrangements. All of these things would have been clear to any credible board of Trustees. To find out more about the charity, check out this part of the charity commission website, searching on either the name or number 1077002 – THE ETHNIC MINORITY FOUNDATION. The charity appears to be employing far more members of staff than its level of activity would require, and the average rate of pay also appears to be very much higher than one would expect for a charity that is small in operational terms. There are a number of specific concerns raised through the accounts that need to be answered. In essence this is why charities have Trustees, they should provide the human explanation for the numbers and words that could be entirely innocent, but on face value seem very unusual. whereas the key issue for a profit making enterprise, is how well does it generate money, charities are measured by how well do they fulfil their charitable objectives. EMF was registered at a time when the scrutiny applied to the establishment of charities was a great deal less than is the case currently, and the objectives of EMF are certainly very woolly and vague.

Whilst it appears clear that Lord Bhatia is the guilty party in this case, the other Trustees need to explain how they allowed the things written in the accounts to pass their scrutiny, let alone why they appear to have condoned the actions that Lord Bhatia is accused of. This case comes hot on the heels of the accounts of a similar level of abuse of finances and power by Paul Flowers, the disgraced Chairman of the Co-op. He is reported to have taken similar sums of money from another charity as a result of being in a position of power, again with no real sign that the Trustees paid much attention to what was taking place.  The Trustees of both of these charities need to explain their apparent lack of challenge. These stories follow on from an article in the Summer on the pay for senior charity executives, part researched by an MP. I wrote about that story here. In my view there is no link or similarity between the abuses in the case of Flowers and Bhatia, and the actions of the DECC charities. However the accumulation of these cases will certainly lead to greater scrutiny of all charities by the media and by members of the public. I believe we in the charitable sector should welcome this, and add our own criticism of poor practice where appropriate. Those of us involved in the Charitable sector should defend its reputation robustly against those who damage it by their abuse, as much as those who write stories based on half truths and wilful misunderstandings. There are some 163,000 charities in England and Wales, the vast majority of which are well governed and managed, many of which are working very hard to support people in need. However we cannot be complacent and one of the reasons why the charity commission publishes our accounts on their website, is to encourage people like you and me to pay a bit of attention to what is taking place in the name of good works. The process of superficial checking is relatively easy and none of us should make donations to charities we have doubts about, but these stories should not deter us from supporting the good work of the many excellent charities that do operate in our name. We also need to ensure that there are sufficient resources for the Charity Commission to do the work we all need it to do. I believe that it has been starved of funds by the Government, and these stories should be a wake-up call for all of us.