Inquiry reveals poor management of London community leisure charity.

The Charity Commission has released the findings from its second statutory inquiry into Newham Community Leisure Trust, identifying “serious misconduct and/or mismanagement in the administration of the charity over an extended period.” One trustee has faced a 12-year disqualification from acting as a trustee due to significant responsibility for the charity’s inadequate governance and management.

The inquiry revealed that conflicts of interest involving the charity and a local football club, where this trustee served as chief executive and which utilized the charity-owned ground, were not properly recognized or addressed. The trustees failed to demonstrate that the agreements with the club were in the best interests of the charity.

The charity secured loans for maintaining and developing the ground for more than a decade, reflecting a lack of sufficient funding to support its activities during that time. Before entering liquidation in 2017, the charity incurred long-term debts exceeding £200,000 due to these loans. Meeting minutes where trustees accepted loans do not indicate any consideration for whether the loans served the charity’s best interests or outline a repayment strategy.

Established in 1992, the charity aimed to benefit residents of the London Borough of Newham by providing a sports centre and support facilities. It had leased the ‘Old Spotted Dog’ football ground in Forest Gate. A previous inquiry was conducted by the Commission, concluding in 2003.

The initial inquiry showed minimal charitable activities and raised concerns about unmanaged conflicts of interest as two trustees were also directors of the local football club. The Commission recommended formalizing the relationship between both entities and ensuring that any transactions were conducted at arm’s length. The subsequent inquiry found no clear separation between the charity and the football club, despite the earlier advice.

The identified misconduct and/or mismanagement that plagued the charity, combined with the accumulation of long-term debts, resulted in the charity’s closure. It was removed from the register in February 2023 due to ceasing operations, and its liquidation process is ongoing.

Amy Spiller, Head of Investigations at the Commission, stated:

The public rightfully expects trustees to make decisions that prioritize the best interests of their charities and advance their charitable goals. It is crucial to identify and manage any conflicts of interest to assure both the Commission and the public that the charity remains focused on its objectives.

The trustees of Newham Community Leisure Trust allowed the charity to accrue debts for activities that could not be substantiated as being in the charity’s best interests, ultimately leading to its financial downfall.

It is appropriate that one of the trustees has been disqualified from serving as a charity trustee or senior manager for 12 years due to their role in the mismanagement of Newham Community Leisure Trust.

ENDS

Notes to Editors

1. The Charity Commission is the independent, non-ministerial government department responsible for registering and regulating charities in England and Wales. Its mission is to ensure that charities can thrive and inspire public trust, enabling individuals to improve lives and strengthen communities.
2. The complete inquiry report is available for viewing online.