Two directors of a Scottish aid charity are barred for life after OSCR took the case to the Court of Session
Two trustees behind a controversial Scots aid charity have been banned for life after allegations of serious financial mismanagement.
OSCR, Scotland’s charity regulator, gained a ruling from the Court of Session, the country’s highest court, to permanently bar Scotia Aid's Kieran Kelly and Alan Johnston from ever becoming trustees of any charity again.
The Uddingston-based organisation has long been suspected of using charitable status to make huge amounts of cash from property deals.
A whistleblower had alleged the aid charity was entering into deals whereby it would take over business premises and leasing them back to businesses for a “donation” to the organisation.
Former cardinal Keith O’Brien – an ex-patron of the charity – raised concerns about Scotia Aid as far back as 2011.
The regulator opened a statutory inquiry into Scotia Aid in 2014 and published an interim report in July last year. The charity had already been subject to investigation by South Lanarkshire Council.
The council investigation found that only 13p in every pound was being spent on charitable activities. OSCR found that payments had been made by the charity to companies connected to trustees. It found those payments were “excessive and have not been sufficiently explained”.
OSCR found that the charity was raising money it may not have been entitled to by claiming it was the tenant on empty properties – saving the landlords business rates – in exchange for donations.
It then went to the Court of Session to take decisive action against the charity’s only two directors.
Full business rates are due on empty commercial premises that remain unoccupied after three months. However, charities occupying commercial premises qualify for a mandatory 80% discount on business rates, provided the property is used wholly or mainly for charitable purposes.
In addition the local authority has the discretion to grant the remaining 20% as a further discount.
The charity has been raising funds by entering into numerous leases which relieved the landlords of the requirement to pay full business rates, in return for a “donation” to the charity.
As this announcement shows, where trustees fail to do this, we will use our powers and take appropriate action - Martin Tyson
Local authorities were concerned a number of the premises leased by the charity had not been used for charitable purposes and had been left empty despite the charity claiming premises were for storage of aid for Sierra Leone.
The order for removal has the effect of permanently disqualifying the individuals concerned from acting as charity trustees of any charity.
Martin Tyson, head of casework at OSCR, said: “After considering all of the available evidence, we became concerned that there was misconduct in the administration of the charity, and took necessary action to protect its assets.
“The Court of Session granting our motion will help ensure that funds will be used more appropriately in the future. Individuals who are a risk to a charity have been prevented from acting as trustees for any other charity. Trustees should always act in the interests of the charity with reasonable care and diligence.
“As this announcement shows, where trustees fail to do this, we will use our powers and take appropriate action.”
TFN has called Scotia Aid numerous times but its contact number no longer exists.
Dan Houston and Scotia Aid Sierra Leone
Scotia Aid as set up in 2010 in Uddingston Lanarkshire, by chairman Dan Houston (above) with the aim of improving lives in Sierra Leone.
The charity raised more than £1 million in 2014, but handed over just £137,000 to good causes, the equivalent of 13p in every £1 raised.
The same year Scotia Aid was being investigated by a number of councils across the UK amid claims it was taking over commercial premises for financial – not charitable - gains.
One of those, Broxtowe Borough Council in Nottinghamshire, raised civil court proceedings against the charity to recover £369,000.
The charity's accounts show that its income stood at £1,020,365 in the financial year 2013/14 up from £790,000 the year before.
But just £137,000 was donated over the same period.
Some £313,000 went on consultancy fees to five companies associated with Dan Houston and two other trustees, Kieran Kelly and chief executive Alan Johnston.
The charity’s highest earner was Kelly who earned almost £120,000.
Houston enjoyed earnings of £104,000, which he was paid via two firms. Alan Johnstone was paid more than £92,000 via one firm.
The accounts show Scotia Aid racked up more than £110,000 in telemarketing costs.
It also shelled out £105,720 on “logistics and travel expenses”, including six trips to Sierra Leone. The rest of its “charitable activities” included legal and professional fees totaling £16,023, motor expenses of £12,387 and subscriptions which cost £2,632.
It also spent £2,105 on entertainment and £1,623 on computer equipment.