Exclusive: OSCR blamed for bankrupting charity - and leaving founder suicidal

Active4all

Ian Strachan (left) at the opening of Yooz's new premises in March 2016 

​Probe by charity watchdog blamed for award-winning charity's rapid demise  

14th March 2017 by Robert Armour 5 Comments

A charity regulator probe based on malicious claims “ruined” an award-winning social enterprise and left its chief executive suicidal, it has been claimed.

Ian Strachan, 64, who founded building supplies’ recycling firm Yooz employed 29 staff and had an income of over £1.2 million.

It had become so successful that just last March it was awarded a £300,000 loan grant from third sector funder Resilient Scotland and access to £800,000 from the Bank of Scotland for expansion.  

However after the Office of the Scottish Charity Regulator (OSCR) launched an investigation based on a tip-off, the charity suffered reputational damage from which it never recovered.  

The whistle-blower alleged Strachan had employed family members while also claiming charitable funds were being diverted to his hotel business.

Strachan told TFN: “It’s been a nightmare. My mental health has suffered terribly. Paying off staff – many of whom are disabled and may never work again - led me to the brink of suicide.”

He claims that despite OSCR clearing the charity of wrongdoing, the regulator reported it to HMRC for allegedly holding back Gift Aid cash.

This created another probe during which the charity’s assets were frozen.

In just six months the reputational damage had sealed the firm’s fate and trading became impossible. 

By December it had ceased operations and in January had been wound up by administrators.

“It became too much for us,” Strachan said. “We had to pay off staff and when word got out there had been an OSCR and an HMRC investigation, suppliers wouldn’t donate.

“It just snowballed from being a successful charity to a failure in a matter of months. With no new donations we had to eat into our reserves and pay more and more staff off."

Yooz was the brand name for Active4All – a disability charity based in North Lanarkshire.

Strachan, who until recently was a board member of Social Enterprise Scotland, established Active4All in 2005 with a vision to help disabled people into employment.

All profits from Yooz, which operated a purpose-built workshop and sales warehouse in Bellshill, were reinvested into the disability charity to offer “tailored work and training opportunities for unemployed people with disabilities or from disadvantaged backgrounds.”

The charity also had plans to create a unique accessible sports complex in North Lanarkshire which it said would be the first of its kind in the world.

But the organisation’s fate was further jeopardised when a staff member leaked details of the OSCR investigation to social media which had a disastrous effect on the charity - halting vital donations and discouraging suppliers.

“Combined with frozen assets, it ruined the charity,” Strachan said. “We went from 29 staff to nine in a matter of months. It impacted on us greatly; we never recovered.”

It impacted on us greatly; we never recovered - Ian Strachan

Despite being chief executive Strachan said he never took a salary. Instead he invested over £100,000 of his own money, most of which he lost.

He added: “I think OSCR should protect organisations from these kinds of malicious claims. We took what action was recommended to remedy the issues OSCR identified. I’ve no doubt we’d still be in business if OSCR hadn’t taken such a heavy-handed approach.”

A spokesman for OSCR said: “To maintain public confidence in Scottish charities, it is vital that anyone who has a concern about a Scottish charity raise it appropriately.

“Furthermore, it is a charity’s duty to understand how to comply with all of its responsibilities, not just those of a regulatory nature. There are various organisations across the third sector to support them in their decision making.  

“In Active4all’s case, any issues that came to light were the result of much more than simply a ‘tip-off’. Robust inquiry work was conducted by OSCR. This included thorough conversations with members of the charity, including Mr Strachan. To address the substantial issues we identified with their governance, we issued recommendations to the organisation, with timescales for follow-up. However, as Active4All’s register entry states, it is now currently subject to insolvency proceedings.

“As part of our inquiries, we identified that the charity might have been incorrectly claiming Gift Aid. We contacted HMRC to disclose information as the law gives us powers to do, and in line with our memorandum of understanding with them (published on our website).”

Chris Holloway, head of Resilient Scotland, said the funder could not have foreseen the financial issues the charity was facing and at the time of the application had “every faith” in the organisation.

“I can confirm that Active4All received investment totalling £300,350 (£150,175 loan and £150,175 grant)," he said.  

"At the time of our due diligence there were no undue concerns raised, other than those normally associated with an investment of this size. 

“We had every faith in the organisation to go on and have a positive future and produce strong social outcomes in their community. 

“Unfortunately this has not proven to be the case and we continue to consider any learning that can be gleaned from this unfortunate occurrence.”

Comments

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14th March 2017 by Edward Harkins

This is an unqualified tragedy, and not least for the late CEO of Yooz and his family. I'm moved to say, however, that I find the style of reportage here dubious. The thrust is to exclusively hold the regulator to blame. It was clearly a highly unusual and complex situation, as were the factors leading to the calamity. There were for example: the unconventional business model of an 'unpaid' CEO; governance issues; a member of staff leaking sensitive material into the fractious social media domain; potential tax issues; and supporters and suppliers who seemingly acted abruptly and arbitrarily to the unverified online allegations. It's vital for the sector that any lessons from this debacle are identified, shared and acted on. A focus on seeking to lay blame at a single source is IME likely to generate defensiveness and silence all round. IMO this article does not help promote the context and spirit in which the necessary kind of open and honest learning by all stakeholders can happen.

14th March 2017 by Steff

how can it be OSCR's to blame if that inquiry was not public? (as far as I can see there is no public inquiry report for this organisation). If OSCR's investigation and its subsequent recommendations were not public knowledge then was it not the whistle blower who caused the exposure for the charity and thus caused the reputational damage?

14th March 2017 by Ian

Another hyperbolic article in the style of the tabloid press - one point of view, little checking of facts. Certainly SCVO should be in the business of promoting good governance, rather than taking another opportunity to have a pop at the regulator?

15th March 2017 by Christina

I'm glad to see the article has been revised to give a slightly more objective view of the story with the expanded quote from OSCR. It is surprising to me that the TFN would publish something that was initially so one sided - and that the tabloid style headline still remains. It's very poor journalism, and not what I would expect from a publication referring to itself as 'the voice of the third sector'.

27th September 2017 by Anonymous

Whilst I stress that I am not the whistleblower in this case, I'd be quite prepared to stand up in a court of law and provide evidence that supports many - most in fact - of these allegations against Yooz/Active4All...Having had an insider view of it, this was little more than a 'family rag and bone' business run as a charity in order to access cheap labour, cheap funding, cheap accommodation and circumvent much of the regulation it would otherwise have had to comply with...Factually Strachan Snr's two (unqualified) sons held the post of 'CEO' and 'Senior Manager' and were salaried. His Nephew was a Director and his wife a Salaried administrator... Strachan Snr's wife was also a Director while he himself held the salaried post of Executive Chairman, having previously worked on an invoice basis.I seriously doubt if they ever properly employed more than a (select) handful of people.About the only thing I see 'wrong' with the allegations is that Strachan bankrupted his hotel business in 2004 (type his name into the Edinburgh Gazette). He dabbled in various things including antiques and catering.Mossbell was to be equipped with a 'catering kitchen' ostensibly for the benefit of trainees. - In reality? It's the one thing I could not swear to (I'd bailed out by then) but, as there was no-one to train these trainees the only use it could have was to serve Ian's catering venture.I'm not aware of anyone having passed away either - forgive me if I'm wrong.Ian D Strachan was last spotted flogging dodgy diet plant via MLM. - The man has a long history as a charlatan and fantasist. And only HIMSELF to blame for the demise of this, his latest wheeze!