The Charity Commission has published the results of its inquiry into Under Tree Schools, a charity which funds and operates a school in South Sudan. The Commission found that there was significant misconduct and/or mismanagement in the administration of the charity over a period from 2017 to 2019, which led to the charity losing funds in the region of £218,000. One trustee has been disqualified from acting as a trustee and holding an office with senior management functions at any charity in England and Wales for a period of 15 years.
The Commission launched its inquiry in December 2019, due to its concerns about the transfer of the charity’s funds from the UK to South Sudan and a failure by the trustees to provide proof of charitable spending of the funds.
In order to fund the school, the charity transferred money from its UK bank account in US Dollars for collection in South Sudan. The funds should have then been transferred from USD to South Sudanese Pounds (SSP), and delivered to the school. One of the trustees, Revd. Ayok-Loewenberg, was a citizen of South Sudan and advised the other trustees on both the exchange rates for the transfer from USD to SSP and on appointing ‘trusted agents’ to collect the money in South Sudan and deliver it to the school.
Revd. Ayok-Loewenberg had advised the trustees of an ‘official’ exchange rate, which was in fact much less favourable than the commercial rates of exchange at the times of the transfer. As a result, the trustees did not have accurate information about how much the transfers would generate in local currency and were transferring more money than was required. The funds transferred were either collected by Revd. Ayok-Loewenberg or by a ‘trusted agent’. The Commission found that the trusted agents used were close relatives of Revd. Ayok-Loewenberg and while he provided receipts of the cash transaction to the other trustees.
The Commission found no evidence that the other trustees had conducted due diligence in relation to the exchange rates, the arrangements of the transfers to South Sudan or the use of the funds. Trustees are collectively responsible for the administration of the charity and the trustees in this case had been overly dependent on Revd. Ayok-Loewenberg due to his specialist knowledge. They did not robustly challenge his views or question the information he gave them, resulting in funds of approximately £218,000 being lost. New trustees were appointed during the inquiry and have established more controlled methods of transferring funds to South Sudan.
The Commission notes in ‘Issues for the Wider Sector’ the legal of duty of trustees to ensure funds are only used to further charitable purposes. Trustees must take steps to monitor the use of funds and carry out due diligence checks to identify and manage risks when choosing partners. South Sudan is considered to be a high-risk country by the Commission. When operating in these countries, trustees should adopt appropriate monitoring and due diligence and refer to the Commission’s guidance on this.