Exclusive: OSCR blamed for bankrupting charity - and leaving founder suicidal
Probe by charity watchdog blamed for award-winning charity's rapid demise
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.”