Rhema Church London – 1075100
Statutory Inquiry under section 46 of the Charities Act 2011
Questions and Answers about the Inquiry and the Interim Manager appointment
Why did the Commission open a Statutory Inquiry?
The Charity Commission, the independent regulator of charities in England and Wales, opened a statutory inquiry into Rhema Church London (registered charity number 1075100). The charity’s objects include the advancement of the Christian religion. The inquiry opened on 3 August 2015.
The Commission has been engaging with the charity as part of an operational compliance case since February 2015, after the charity’s auditor qualified its accounts for the year ended September 2013. The accounts and annual return were filed late and the auditor qualified the accounts on the basis that they had been unable to obtain sufficient audit evidence to quantify how much of the expenditure incurred on the charity’s credit cards of £203,707, and petty cash expenditure of £76,161, was incurred in accordance with the fulfilment of its objects. This included £86,055 relating to overseas development workshops. This raised regulatory concerns that charitable funds may have been misapplied.
The Commission is also concerned by evidence it received in July 2015, which states that the trustees rejected the conclusion of the auditor’s report. This and the trustees’ failure to fully comply with a Commission order for information raised further regulatory concerns for the Commission.
The issues the inquiry is examining include:
- the trustees administration, governance and management of the charity;
- whether or not and to what extent there has been mismanagement and/or misconduct on the part of those acting in the administration and management of the charity;
- whether the trustees are willing and able to take necessary action to rectify the problems within the charity;
- the possible misappropriation and/or misapplication of the charity’s funds;
- the charity’s financial controls and risk management policies; and
- the failure to comply with legal obligations in relation to the filing of the charity's accounts and annual returns.
Who is ultimately responsible for the difficulties the charity now faces?
It is the charity’s trustees who are ultimately responsible for the charity’s current difficulties. Where charity assets are inappropriately lost as a result of poor governance, including the failure to manage the charity’s staff properly, the trustees are potentially liable for those losses.
Why did the Commission appoint an Interim Manager (IM)?
The Commission took the decision to appoint an IM due to the serious concerns about the current trustees’ ongoing ability to govern the charity and its staff. The IM’s full remit is covered in the Order of Appointment dated 30 November 2015; copies of which will be available at the meeting on 28 November 2017.
Why is the Inquiry taking so long?
It was originally envisaged that the IM appointment would take around 8 months to complete, however, due to a lack of cooperation from trustees, staff members and the specific actions of some of the charity’s employees; the assignment has taken much longer and has become more costly as a result of this and the extent of the further issues that have, and continue to, come to light.
What has been the lack of cooperation?
The lack of cooperation comprises the following:
- repeated failures on the part of staff members to provide information/documentation requested by the IM since the IM appointment;
- refusal by staff members to follow directions and instructions provided by the IM as well as some staff members failing to follow the new policies and procedures put in place by the IM as part of his appointment;
- some staff members have also allegedly failed to comply with the terms of their contracts of employment, which the IM is investigating;
- removal of papers from the charity's premises; and
- unauthorised use of church funds, which has required ongoing investigation.
The lack of cooperation received has resulted in considerable issues that have needed to be resolved by the IM, which have required communications with a number of third parties including HMRC, insurance companies, phone companies etc.
Who pays for the IM?
Where Interim Managers are appointed, it is ordinarily the case that costs are met from the charity’s funds. This is unfortunate for the charity, and therefore often avoided, but is an inevitable consequence where trustees have failed in their duty to manage the charity properly and where the appointment is considered a proportionate and appropriate measure relative to the concerns in the charity.
What oversight does the Commission have over the IM?
The Commission has a supervisory role over the IM's appointment and receives regular reports on progress and issues. The Commission also authorises cost proposals submitted by the IM for each work stream, for example, administering the charity, investigating possible misconduct and any associated legal costs. It is not, however, responsible for the daily actions of the IM or sets out how the IM should carry out its functions in relation to the charity.
Why has our church been shut and why have all its activities been stopped?
It is alleged that unauthorised steps were taken by certain staff members of the charity around June 2017, which involved attempting to transfer the lease that the charity had with West Croydon Baptist Church (WCBC). In light of this attempt, WCBC terminated the lease with the charity; notification of which was received by certain staff members who failed to inform the IM.
The charity was, therefore, left without a venue to hold its Sunday services. In addition, in light of various allegations against certain staff members, which the IM is investigating, the IM was concerned that any future Sunday services would not be used for their proper purpose if attended by certain staff members. The IM, therefore, made a carefully balanced decision to suspend the Sunday services until investigations into the allegations against certain staff members have been concluded. It is hoped that this is a temporary measure and efforts are being made to see how they can be safely and properly resumed.
The IM has, however, made attempts to start certain activities again including the bible school and the Christmas shoe boxes, which he has discussed with various individuals connected with the charity. Following such discussions, however, the IM decided, with the agreement of the individuals concerned, that all activities should be suspended until the current investigation is resolved. The IM will continually review this decision though to see whether it is possible to resume some activities in the near future.
Why has the charity’s property been put on the market?
No charity property has currently been put on the market but due to the liabilities that the charity owes to HMRC, which total approximately £370,000, it will be necessary to put one of the charity's properties on the market in order to meet these liabilities.
The IM intends to put Nutfield Court on the market when required as it is believed to be the most saleable property.
What will the charity’s future be and who decides?
At this particular time, the IM, under the Order of Appointment, can consider and make a decision as to what the charity’s future should be. The decision will be made strictly in accordance with the charity’s objects contained in its Governing Document (a Declaration of Trust dated 14 January 1998). The IM will be taking into account a number of factors in order to determine and where possible support the charity's future viability.
As members, we are angry and frustrated that the charity’s activities have stopped – what is going to happen next?
Both the IM and the Commission sympathise with members and have considered the matters in this case carefully, in particular, having regard to the impact of the services the charity has historically provided. At this point in time, however, for the reasons given above, the IM has had to take action to protect the charity's assets in the longer term and to ensure governance can be regularised. Future options as to the charity's governance could include the appointment of new trustees to take the charity forward; however, it is too early at this stage to say what action will be in the best interests of the charity's future.
What happens at the end of the inquiry?
It is the Commission’s policy, after it has concluded an inquiry, to ordinarily publish a report detailing what issues the inquiry looked at, what actions were undertaken as part of the inquiry and what the outcomes were. Where an Interim Manager has been appointed, full details of costs and disbursements incurred will be included in the report.
How are the members going to be kept informed?
The IM will use the charity’s website to kept members up to date on developments.
Can I have my Tithes/Donations to the charity returned?
Generally, donations are treated as non-returnable (to return donations would also carry a tax risk for both the charity and also the donor). Where funds are generally donated to a charity in order for it to carry out its charitable purposes, then they are treated as gifts which are non-returnable. Tithe offerings are donations.
Am I a member of Rhema Church London?
All charities ultimately exist for the benefit of the public, including Rhema which is governed by a Declaration of Trust dated 14 January 1998 (DOT). This document contains the charity’s objects which are stated to be as follows:
FOR THE ADVANCEMENT OF THE CHRISTIAN RELIGION AND FOR SUCH OTHER PURPOSES AS ARE CHARITABLE IN LAW INCLUDING WITHOUT PREJUDICE TO THE FOREGOING GENERALITY THE ADVANCEMENT OF EDUCATION AND RELIEF OF THE AGED, INFIRM AND POOR PEOPLE.
The DOT filed with the Charity Commission does not set out how membership will be determined. As such, from a governance perspective, the Charity is not known to have members. However, by virtue of the Charity’s wide objects, it has a number of stakeholders which would include people who attend the Charity’s church services, seminars, events and activities, as well as any beneficiaries. The Charity’s stakeholders will therefore be broader than those who pay tithes to the Charity.