Serious financial abuse found at Astonbrook Housing Association

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The Charity Commission’s inquiry into allegations of serious fraud by Astonbrook Housing Association has recently been published. The inquiry demonstrates how the Charity Commission, when acting together with other agencies including the police, can ensure that a charity’s beneficiaries are protected and those that enrich themselves at the expense of the charity are brought to justice.

The housing association, which provided housing and support to thousands of refugees and asylum seekers in the West Midlands, Wales and South West of England, went into liquidation in 2009. However, the Charity Commission’s investigation began in 2007 when other agencies alerted the Commission of concerns about the charity’s management. The Commission’s inquiry found evidence of the use of cheques raised in payment for fictitious invoices made out to trustees. Staff members at the charity and the trustees had created ghost employees, some of whom were the family members of the CEO, having been listed on the charity’s payroll. Also, charity funds were being used to buy residential properties which were subsequently used as personal housing or rented back to the charity.

The substantial fraud at the charity was proved in subsequent criminal trials.

The inquiry, however, found serious and systematic mismanagement and misconduct by the trustees. They had failed to put in place and monitor property management systems and financial controls, failed to manage conflicts of interest and failed to properly manage the charity’s services. The finding is strikingly similar to the findings of the reviews carried out by the Welsh Government and the Big Lottery Fund into AWEMA. Fortunately these cases are few and far between, but the media attention received mean that they do have a lasting damaging impact on public confidence. To regain that public trust and confidence, the need to have (and to demonstrate) good governance is therefore paramount.