Inquiry into charity that made more than £1.7m in loans to connected company

Posted on: August 12, 2021

The Charity Commission has opened a statutory inquiry into a charity whose trustees were involved in the awarding of loans totalling over £1.7m to a company they had connections to.

The regulator first opened an inquiry into the MB Foundation (also known as the Mossad Horav Aryeh Halevy) as part of its “double defaulters” class inquiry for failing to submit annual accounts for the financial years ending 31 March 2014 and 31 March 2015.

Subsequent scrutiny of the accounts and information received from the trustees raised several concerns about the charity’s governance, in particular, the trustees’ handling of conflicts of interest, the commission said.

The charity lists its activities as providing financial support to help relieve sickness and poverty.

But the charity’s trustees, which the commission said were all brothers, carried out several transactions with companies and individuals directly connected to the trustees or the trustees’ family members.

This included a total of four loans to a connected company totalling more than £1.7m, according to the regulator.

The charity’s total income up to 31 March 2020 was £941,000 according to its entry on the online register of charities.

The trustees had failed to provide any formal documentation in relation to the loans, the commission said, and they did not provide information to demonstrate they had adequately identified or managed conflicts of interest.

The regulator said its inquiry would focus on the trustees’ decision making, particularly regarding loans and investments and whether the trustees had adequately managed potential conflicts of interests.

It will examine if there has been any unauthorised or indirect private benefit,

whether the charity has suffered any financial loss as a result of any mismanagement/misconduct.

It will also assess whether trustees have fulfilled their duties and responsibilities under charity law.

Third Sector was unable to contact anyone from the charity for comment.

Author: Jade Bolton
Categories: News

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