A charity-operated television channel has been dissolved after the Charity Commission found its former trustees had not sufficiently monitored its chief executive’s actions, leading to financial and governance failures.

The regulator has today published a report into its inquiry into Sikh Channel Community Broadcasting Company Limited, a Birmingham-based charity that was set up to advance the knowledge of the Sikh faith.

The report says the charity’s former chief executive has accepted a 10-year ban from holding senior positions in any charity after the regulator uncovered a string of management and governance failings. 

Engagement between the regulator and charity began in 2019 after concerns arose about its fundraising partnership with the unregistered organisation Sikh Youth UK, an organisation that was already subject to a statutory inquiry.

The charity organised a fundraiser in 2018, stating that money raised would pay for Sikh Youth UK support workers.

But the regulator found that SCCBC misled members of the public by not stating that 40 per cent of the more than £240,000 raised in donations, including Gift Aid, would be kept by the Sikh Channel Community Broadcasting for its general expenditure. 

“The inquiry found that the then-trustees’ failure to conduct due diligence on Sikh Youth UK, failure to monitor the use of the charity’s funds, and the misleading nature of the fundraising appeal were all misconduct and/or mismanagement by the trustees of the charity at the time,” the regulator said.

Trustees were unable to provide evidence of an audit trail or copies of monitoring reports detailing the end use of funds given to Sikh Youth UK to ensure the funds were used as intended and in line with the charity’s objectives.

The founders of Sikh Youth UK have subsequently been sentenced for fraud.

Concerns were also raised about the relationship between the charity and companies connected to its chief executive, who the regulator refers to as Mr X.

The regulator’s report found trustees failed to manage a “clear conflict of interest” in relation to the appointment of Mr X as chief executive.

“The chief executive, who was also a trustee at the time, appointed himself to the role without an open recruitment process, and in breach of the charity’s governing document,” the regulator said.

“The trustees were all family members of the chief executive, and the inquiry found that the trustees had insufficient control and oversight of his actions, leading to breaches of charity law. 

“This amounted to misconduct and/or mismanagement by the trustees at the time.”

Mr X at times acted as a de-facto trustee and set himself an unauthorised yearly salary of £40,000, the regulator found.

The inquiry found that the charity made a bank transfer for £654 to a private company owned and directed by Mr X.

“The payments of the unauthorised salary, the bank transfer and loans to a trading subsidiary of the charity showed a lack of financial control by the trustees, and failure to act in the charity’s best interests,” the regulator said.

Trustees also submitted late accounts for the years to the end of September 2017, 2018, 2019 and 2021.

The only year in which the charity filed its annual return and accounts on time was for the year ending 30 September 2020, when it was being run by interim managers appointed by the regulator.

Following the inquiry, Mr X gave an undertaking that he would not act, be appointed to, or accept a position as trustee or senior manager of any charity, including non-registered charities, and would refrain from acting as a trustee or senior manager for 10 years without the express written permission of the commission.

A new board was appointed over the course of the inquiry and they took the decision to wind up and dissolve the charity.

Joshua Farbridge, head of compliance visits and inspections at the Charity Commission, said: “Our findings serve as a cautionary tale against allowing any one person to dominate and assume control of a charity.

“In this case, the trustees failed in their duty to oversee and manage the actions of the chief executive, resulting in significant failures in the charity’s administration and governance.”