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Statutory Inquiry: Cardiff Sixth Form College

The Charity Commission, who act as an independent regulator of charities in England and Wales, has opened a statutory inquiry into Cardiff Sixth Form College, registered charity number 1123262. The college and charity aims to advance the education of young people in Cardiff and to support other charitable purposes. This is carried out by providing independent sixth form education.

The Commission opened a compliance case in April 2016 relating to the charity's failure to submit its accounts. The Commission reviewed the charity's accounts and identified a number of regulatory concerns, resulting in a books and records visit being conducted in July 2016. As a result of that engagement, the Commission has identified regulatory concerns about the charity's governance, financial management and significant related party transactions between the charity and some of its former trustees. The charity does not appear to have identified and/or managed conflicts of interest and there have been significant high value transactions which may not have been properly authorised.

The Commission considers that collectively these issues raise serious regulatory concerns about the administration and management of the charity which requires further examination. The inquiry will examine:

• the administration, governance and management of the charity by the trustees with specific regard to decision making
• whether there has been any unauthorised private benefit to trustees (current and former) or connected parties
• whether the trustees (current and former) have properly exercised their legal duties and responsibilities in accordance with charity law and their governing document
• whether any conflicts of interest have been properly identified and managed by the charity
• the financial management of the charity, in particular whether the charity has sufficiently robust internal financial controls
• whether there has been any misconduct and/or mismanagement by the trustees'

It is important to note that the Inquiry is focused on the governance and financial management of the charity not about its provision of education.

In order to protect the charity's property, the Commission made an order to restrict the charity's bank account under section 76(3)(d) of the Charities Act 2011. In addition, on 1 November 2016 the Commission appointed an interim manager, under section 76(3)(g) of the Act. The interim manager has been appointed to the exclusion of the current trustees to review the governance infrastructure, as well as financial controls, and to manage and oversee the proposed sale of Cardiff Sixth Form College to Dukes Education. In addition, the Interim Manager will consider pursuing legal action if the charity has lost money as a result of breach(s) of trustee duty(s).

Further to the scheduled inquiry, it is known that South Wales Police are investigating a number of allegations concerning historic financial irregularities. The Commission are liaising and working closely with South Wales Police as part of the investigation.

The purpose of an inquiry is to examine issues in detail and investigate and establish the facts so that the regulator can ascertain whether there has been misconduct and mismanagement; establish the extent of the risk to the charity's property, beneficiaries or work; decide what action needs to be taken to resolve the serious concerns, if necessary using its investigative, protective and remedial powers to do so. The opening of an inquiry does not automatically suggest wrong doing.

After the inquiry has taken place the commission will publish a report detailing what issues the inquiry looked at, what actions were undertaken as part of the inquiry and what the outcomes were. A newsflash blog on the outcome of the inquiry will follow.

Forbes Solicitors regularly advice charities on a range of good governance matters including whether entering into certain transactions is compatible with charitable objects. If you have any questions, please contact Daniel Milnes.

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