Charity Commission report on Iran Aid (UK)

Charity Commission report on Iran Aid (UK)

Iran Aid – (Registered Charity 326460)

Introduction

1. This report is the statement of the results of an Inquiry under Section 8 of the Charities Act 1993.

2. Iran Aid (the charity) was
established by declaration of trust on 20 September 1983 to provide for the
relief of conditions of need, hardship or distress of Iranian refugees and
Iranians in Iran who are in necessitous circumstances. The proposed beneficiaries
were orphan children in Iran who were in need as a result of their families
being opposed to the Iranian government.

Issues

3. In March 1998 the Charity
Commission received allegations that the charity was being used by a terrorist
organisation, the Mujaheddin el Khalq (MKO), to raise funds. Under the
Terrorism Act 2001 the MKO is now a proscribed organisation. Those making the
allegations insisted on their details remaining confidential. This is not
unusual in Inquiry cases.

4. In view of the possible
political motives of any complainants, the Commission took what steps it could
to establish the bona fides of the allegations. As a result of these
enquiries the allegations were considered to warrant further consideration.
However, because of the difficulty in obtaining verifiable and reliable
evidence either proving or disproving links with a terrorist organisation,
investigators decided to concentrate their enquiries on whether or not the
charity spent its funds on its intended beneficiaries. The trustees have always
denied links with terrorist organisations.

5. A previous Inquiry in 1996
resulted in the charity being warned about its fundraising methods. Despite
this warning complaints from the public about Iran Aid’s fundraising methods
reduced but continued at an unacceptable level.

6. On 8 May 1998, the
Commission instituted an Inquiry under section 8 of the Charities Act 1993.

Formal Actions Taken

7. On 22 July 1998, after
obtaining information from the charity’s bankers about the destination of the
charity’s funds, the Commission froze Iran Aid’s bank accounts. The Commission
was concerned to find that the funds, some £5 million per year, were all paid
into an individual’s account in a country other than Iran.

8. On 23 July 1998, on the
basis of information already obtained about the charity’s activities and the
possible risk to its funds, a temporary manager known technically as a Receiver
and Manager was appointed. He was appointed to carry out a range of duties
including: –

  • The management of the affairs of the charity
    whilst the Inquiry took place
  • An assessment of the methods used by the
    charity to distribute its funds
  • Formulating recommendations as to the
    long-term viability of the charity.

9. As soon the Receiver and
Manager took control of the charity’s bank accounts the Commission unfroze
them.

10. The Commission served
Orders on the trustees requiring them to provide the charity’s records and in
particular, those relating to payments to its beneficiaries.

11. On 6 November 2000,
following a period of public notice, the Commission established a scheme. This
had the effect of directing the Receiver and Manager to dissolve the charity
and pass its net assets to a newly established independent charity, the Iran
Aid Foundation (Charity 1082759). This new charity had been formed, following
discussions by the Commission with supporters of the charity, for the purpose
of receiving these assets.

Findings

12. In establishing how the
charity operated and how it spent its funds the Commission came to the
following findings and conclusions.

Fund-raising

13. The Commission’s Inquiry
identified a number of concerns about the charity’s fund-raising methods. These
concerns included:-

  • That some donors were misled into believing
    that they were personally sponsoring individual children when this was not
    in fact the case. The Commission concluded the sponsorship to be spurious
    and misleading.

14. During the previous Inquiry
into the charity’s fund-raising activities, the Commission warned the trustees
of the importance of conducting public fundraising properly. The present
Inquiry highlighted similar concerns over the propriety of fundraising
activities. In particular there were examples of misleading promotional
literature, complaints by donors about high pressure “selling”
techniques and an apparent failure to separate funds raised for different
projects.

15. The Commission’s attempts
to investigate fundraising issues further were hindered by the inability of the
trustees to identify properly those volunteers responsible for fund-raising,
and more particularly by the trustees’ inability or unwillingness to identify
the co-ordinators apparently responsible for organising the volunteers.

The charity’s records

16. From the Commission’s
enquiries it was apparent that the trustees had not met their obligations to
maintain proper accounting records. These obligations arise under the
requirements of the charity’s own governing document, statute and the common
law duties of trustees. The Commission and the Receiver and Manager were unable
properly to examine the books and records of the charity or to ascertain fully
what accounting records existed. This was caused by a lack of co-operation on
the part of the trustees, and an unlawful occupation of the charity’s premises
that occurred between October 1998 and June 2000. As a result, the Commission
was unable to conclude that the accounting records required by law existed or
were properly kept. The occupation raised the following issues:-

17. The occupation of the
charity’s premises started with the expressed intention of denying the
Commission and Receiver and Manager the full access to records that both were
legally entitled to receive. The trustees said that they played no part in this
illegal occupation and could not identify any of those responsible, but the
occupation had a deleterious effect on the Commission’s ability to scrutinise
the charity’s records.

18. The occupation also raised
serious concerns about the charity’s ability to operate in the future. Those in
occupation made it clear that they were unwilling to permit any access to the
charity’s premises and records unless the Commission allowed the charity to
function as it did before the Receiver and Manager was appointed. The
occupation ended with the destruction of all records that might have been
expected to show how the charity distributed its funds.

19. Prior to the occupation the
trustees had applied to the courts for a temporary injunction preventing the
removal by the Receiver and Manager of the charity’s records. The High Court
refused an application by the trustees of the charity to extend this temporary
injunction and made it clear that the Receiver and Manager had a right of possession
and control over the charity’s records. In the Court’s view the assurances
given to the trustees about the security of the records were proper and
entirely adequate.

Transmission of funds to Iran
and their application.

20. During the course of the Inquiry
neither the Commission, nor the Receiver and Manager, were able to see any
substantive and verifiable evidence to show how the charity spent its funds in
Iran, or even that the funds eventually arrived there. As a result the
Commission was unable to confirm that funds reached Iran or were applied in the
furtherance of the charity’s objects.

21. The trustees maintained
that the methods used to transmit and distribute funds were necessary, taking
into account the vulnerability of the recipients and the circumstances in Iran.
However the way that this was carried out was inherently unaccountable, and was
incapable of any independent verification.

22. The charity’s funds were
all sent via a middleman based in the Middle East, but not in Iran. The Commission
interviewed this intermediary in Germany with the aim of establishing the
reason for the charity transmitting its funds in this way and how these funds
might then reach the charity’s beneficiaries in Iran. Despite this interview,
investigators were unable to establish sufficient details about the individual
or his activities to suggest he was an appropriate person to handle these
significant amounts of money. The trustees claimed to have references for him
but would not show them to investigators.

23. The trustees effectively
had no control over the distribution of funds once these left the charity’s
bank accounts in this country. Furthermore the trustees were unable to provide
a satisfactory explanation for certain missing funds having admitted that by
their own reckoning, 10% of the funds sent to Iran could not be accounted for.
The trustees were also unable to show that adequate financial controls were in
place over the distribution of funds through a complex network of
intermediaries.

24. During the Inquiry
investigators sought information from other Government Departments including
the Department for International Development and the Foreign and Commonwealth
Office. These bodies had no knowledge of the charity operating in Iran.
Representatives of Charities that operated in Iran were also asked whether they
had had any contact with Iran Aid during their relief work; none had. These
discussions also gave rise to serious doubts that a charity would be able to
run such a large covert organisation inside Iran, supporting some 14,000
children, without it being detected by the authorities and stopped.

25. The trustees did not
co-operate fully with requests for information from the Commission’s
investigators or the Receiver and Manager. Notwithstanding the trustees’ claims
that records and evidence existed but were no longer available to them, the
trustees did not assist even when the information requested was expected to be
within their control and ability to deliver.

Outcome

26. Having fully considered the
evidence, including the trustees’ responses to our enquiries, the Commission
was satisfied that that there had been, at the very least, mismanagement in the
affairs of the charity. It was also necessary or desirable for the Commission
to act to protect the property of the charity, or secure a proper application
for the purpose of the charity. The conditions prescribed by section 18(1) of
the Charities Act 1993, needed before the Commission could take formal remedial
action, were therefore met.

27. A remedial scheme was
established which had the effect of directing the Receiver and Manager to
dissolve the charity and pass its assets to a new independent charity, the Iran
Aid Foundation.

28. During the occupation of
the charity’s premises Commission staff held meetings with a number of people
who might have been able to influence the occupiers to allow the Commission
access to the records. A final decision on the future of the charity was
delayed while these discussions took place. During these discussions the idea
of setting up a new charity to carry on the charitable work of Iran Aid, but
under a differently constituted trustee body, emerged. The Commission was
pleased to be able to facilitate this.

29. The Commission reported the
illegal destruction of the records to the police, as an offence under section
11 of the Charities Act 1993 appeared to have been committed. At the time of
publication of this report police enquiries are ongoing.

Wider Lessons

30. In order to support public
confidence in the integrity of charity generally, the activities of any charity
must be verifiable and accountable and permit effective supervision by the
Court or the Commission should that prove necessary. A charity may be required
to produce any document to the Commission where it is relevant to the
Commission’s statutory functions.

31. Charities working in
circumstances where the identity or other information about beneficiaries needs
to remain confidential have the same requirement of any other charity to keep
records that will, if called for, allow for effective supervision by the
Commission.

32. S41 of the Charities Act
1993 requires charity trustees to ensure that accounting records be kept which
are sufficient to show and explain all the charity’s transactions.

33. S 506 of the Income and
Corporation Taxes Act 1988 provides that a payment made (or to be made) to a
body situated outside the United Kingdom shall not be qualifying expenditure
for the purposes of tax concessions unless the charity concerned has taken such
steps as may be reasonable in the circumstances to ensure that the payment will
be applied for charitable purposes.

34. Charities that fundraise,
especially when the fundraising activities take place across a wide area or
through a network of volunteer collectors, must ensure that their control
systems are sufficiently rigorous to ensure proper compliance with good
practice so as not to bring the name of the charity, or charities in general,
into disrepute.

35. Trustees must be able to
devote sufficient time to their duties to effectively monitor the actions of
their senior volunteers or staff. In the case of a charity which is run
effectively on a day to day basis by volunteers the trustees should be aware of
the identities and addresses of these individual and the duties they carry out.

———-

See also:

Mojahedin misuse Europeans

Source: Irandidban.com

Some Mojahedin members in
European countries are collecting relief funds in order to support the
terrorist acts of this group. They do this under different guises such as aid
for charity associations, aid for Iranian orphans and poor Iranian families or
aid for families whose tutor has been detained in Iran.

They have also brought a number
of old women, having some pictures with themselves, to the streets to attract
sympathy and aid from Europeans.

12 January 2002

Berlin – One of the Mojahedin’s
experienced members, who had introduced 4 of his children as orphans by
presenting forged documents, has been detained.

This man, who is a member of
the charity for Iranian refugee children association, could receive more than
half a million euros from Germany’s public aid office.  Köln’s Rondshaw
newspaper in a report called “global search and prosecution of
Mojahedin” wrote: “a charity for Iranian refugee children is accused
of receiving money for children on various grounds and giving it to the
Mojahedin to buy weapons.”

This newspaper added:
“there is hard evidence that the Mojahedin bought weapons with the money
which it received from Köln’s public affair.

The chief of Köln’s investigating
team said: “we have a close relationship with American security officials
about this fraudulence. A 10-member group that deceived the charity association
is now in the U.S. and some other members are in Iraq and France.


19 December 2002

Berlin – the agents of
Germany’s public prosecution inspected 25 Mojahedin offices.

According to Germany’s news
agency, these offices gave the money which it received from people and the
government of Germany, to the Mojahedin to buy weapons instead of giving it to
refugee children.

Germany’s news agency added:
” two members of Germany’s green party headed this association, but they
are excluded from the police investigations. Muller and Lutex, after the
publication of this news in newspapers, resigned. The green party is one of the
coalition parties in the Germany’s government.

 

|