A megachurch based in Kent has come under fire from the Charity Commission over millions of pounds of unauthorised investments made by a trustee which "appeared to be speculative and high risk in nature".
Though he is not named by the Commission, the trustee in question was Richard Rufus, the former Charlton Athletic footballer who was sacked by the club in 2015 and criticised by a High Court judge after he was revealed to have orchestrated fraud with £16 million from investors including family, friends and churches.
One of the churches was the Kingsway International Christian Centre
(KICC) which was initially investigated in 2011 by the Commission.
The Commission released a report today which found that £5 million of the church's funds were invested, resulting in a net loss of £3.9 million.
"The Commission liaised with the then Financial Services Authority
and established that the individual [Rufus] was not authorised to carry
out regulated activities (such as dealing in or managing investments).
This raised serious concerns as the charity had made substantial
investments through the individual which appeared to be speculative and
high risk in nature," the Commission said.
"The Commission's inquiry established that the trustees who were in
place at the time had invested a total of £5 million of the charity's
funds, which subsequently resulted in a net loss of £3.9 million to the
The church is accused of "mismanagement".
report concludes that "the trustees who made the investment were
responsible for mismanagement in the administration of the charity."
The Commission's conclusions include that the trustees who were in
place at the time of the investment failed to: "exercise sufficient care
when making the decisions to invest £5 million of the charity's funds
through the trustee's investment scheme; ensure they were sufficiently
informed and take into account all the relevant factors - they could not
show that their decisions were based on sufficient and appropriate
evidence particularly as they did not seek proper independent advice on a
high risk, high value investment scheme; manage conflicts of interest
when making the decision to invest - there was too much reliance on the
expertise of the trustee when he was personally interested and
conflicted in the decision to invest charity funds through the trustee's
Michelle Russell, director of investigations, monitoring and
enforcement at the Charity Commission, said: "This case is a reminder
that trustees must ensure that they do not permit any personal
associations to interfere inappropriately with their judgement as
charity trustees and that any decisions they make are in the best
interests of their charity. When trustees are considering a high risk
decision, particularly one involving significant sums of money, they
should take independent professional advice from properly qualified
persons to ensure that they are not exposing the charity to significant
risk. Donors and beneficiaries have a right to expect trustees to take
appropriate steps to protect property of the charity.
"We make clear in our policy and guidance
that where trustees are reckless and make poor decisions that are not in
the best interests of the charity and result in significant losses, the
Commission will ensure that they are held to account."
In a statement issued to Christian Today, KICC acknowledged "the seriousness of the mistake that was made".
The church said: "The current trustees accept the Report of the
Commission and acknowledge the seriousness of the mistake that was made.
The trustees at that time believed they were acting in the best
interests of the charity and have not benefited personally. We are
speaking of events that happened seven and a half years ago. None of the
current trustees were involved in the decision making regarding the
investments with the now ex-trustee. Since then, we have worked with the
Commission, and our professional advisors, to put robust controls in
place that would prevent any re-occurrence. With the benefit of hindsight it is clear that the former trustees'
decision to invest was not a prudent one. The Charity has since
continued to operate and successfully carry out its charitable
objectives to the community and looks forward to continuing to do so."
Since 1992 KICC has grown from an initial membership of 300 people to
a congregation of several thousand at its headquarters church.
In addition the church has some twenty branches mainly around the M25
including Luton, Bedford, Birmingham, Bristol, Oxford, Manchester and
its French-speaking church, which holds services at a separate location