Charity Commission recovers £50,000 in funds

charity commission disqualifies trustee, recovers £50,000 in funds

A statutory inquiry by the Charity Commission into The Mahfouz Foundation has resulted in the disqualification of a former trustee and the recovery of £50,000 in misapplied funds. The inquiry, which began in November 2021, concluded with the publication of an official report on Thursday, September 5. The Commission uncovered serious misconduct and mismanagement by the charity's trustees, prompting swift regulatory action to ensure accountability and recovery of funds.

Background of The Mahfouz Foundation

The Mahfouz Foundation was registered as a charity in 2012 with the objective of advancing public education in the history, literature, language, institutions, and culture of the Middle East. It was originally intended to promote cross-cultural understanding and enrich the UK’s public knowledge of the Middle Eastern region. However, by 2021, concerns emerged over the charity's activities, which led to the Charity Commission's intervention.

Concerns and Inquiry Launch

In September 2021, media reports surfaced, alleging that The Mahfouz Foundation had received donations meant for a different charity. Following these claims, the Charity Commission began an engagement with the trustees to investigate the matter, which soon escalated into a formal statutory inquiry by November of the same year.

The primary focus of the inquiry was whether donations received by the foundation had been used in line with donors' intentions and whether the trustees had properly managed the charity in accordance with their legal duties. Specific concerns arose regarding the misuse of the charity’s bank account, which appeared to be acting as a financial conduit for third parties rather than being used to advance the foundation’s stated charitable aims.

Findings of Misconduct and Mismanagement

The Charity Commission's investigation uncovered several alarming findings. The trustees had allowed The Mahfouz Foundation’s bank account to be used primarily for transferring funds on behalf of third parties. The inquiry found that the vast majority of transactions handled by the charity were for the benefit of others and did not contribute to the foundation’s charitable objectives.

One of the most significant discoveries was that £193,730 in donations, which donors had intended to be directed to the King’s Foundation (a Scottish-registered charity), had instead been transferred from The Mahfouz Foundation's account to a private company owned by former trustee Michael Wynne-Parker. This misuse of funds was authorized by the charity’s trustees, demonstrating a lack of oversight and regard for the charity’s purposes.

Additionally, the investigation revealed that funds deposited into The Mahfouz Foundation's bank accounts by donors were frequently misapplied and did not align with the foundation’s educational mission. Instead, these funds were redirected for unrelated purposes, bringing into question the trustees’ ability to uphold their legal responsibilities.

Regulatory Action

The Charity Commission took decisive regulatory action to address the misconduct. Michael Wynne-Parker, one of the trustees at the center of the investigation, was disqualified from serving as a trustee or holding a senior management role in any charity for 12 years, effective January 29, 2024. His disqualification reflects his unfitness to act as a trustee following his involvement in the charity’s mismanagement.

In addition to the disqualification, the Commission secured the return of £106,270 to a donor. This amount represented the remaining portion of the original deposits made by the donor into The Mahfouz Foundation's account, which had not yet been misused. A further £49,581 was recovered from the trustees, compensating for losses the charity had incurred due to the misapplication of funds. These recovered funds will now be reallocated to a charity with similar purposes, ensuring they are used for charitable activities in line with donor intentions.

Official Warning and Deregistration

On October 5, 2023, the Charity Commission issued the trustees of The Mahfouz Foundation with an official warning under section 75A(1)(a) of the Charities Act, formally reprimanding them for their failure to properly manage the charity. The foundation was subsequently removed from the Charity Register on October 6, 2023, as it no longer operated. This marked the end of The Mahfouz Foundation’s troubled existence as a registered charity.

Commission’s Statement

Angela Ascroft, Critical Case Lead at the Charity Commission, issued a strong statement in response to the inquiry’s findings: "The trustees’ actions in this case demonstrated scant regard for the charity’s purposes, instead allowing the charity to be misused as a conduit for funds that were misapplied and misused. All trustees of a charity are jointly responsible for ensuring its funds and bank account are used only to achieve its purposes."

Ascroft also emphasised the importance of the Charity Commission’s role in safeguarding public trust in charities, reiterating that the Commission will take decisive action when trustees fail to meet their legal obligations. She added that the findings of the inquiry serve as a reminder that trustees are accountable for the proper use of charitable funds and that serious consequences will follow if these duties are neglected.

Conclusion

The disqualification of Michael Wynne-Parker and the recovery of nearly £50,000 in misapplied funds underscore the Charity Commission’s commitment to holding trustees accountable and ensuring that charitable resources are used for their intended purposes. The case of The Mahfouz Foundation serves as a cautionary tale for all charities, highlighting the need for strong governance, transparency, and adherence to legal responsibilities.

The full findings of the inquiry are available in the official report published by the Charity Commission.