Charity Watchdog Slams East London Mosque Following £1M Loss

Charity Watchdog Slams East London Mosque Following £1M Loss

Charity Commission Warns East London Mosque After £1M Investment Loss

East London Mosque Front View

The East London Mosque Trust has received a formal warning from the Charity Commission over its handling of a substantial investment loss. The watchdog criticized the trust for not managing its funds responsibly after an investment of £1million went missing.

The commission, acting under provisions of the Charities Act 2011, stated that the charity’s resources were not overseen with the care expected of an organization of its stature. Trustees were found to have insufficiently reviewed and monitored the investment and failed to carry out the necessary due diligence on the investor, their personal guarantors, and related parties.

The trust had placed the £1million in an NHS-approved supplier with the anticipation of receiving a 20% return within six months. Unfortunately, the supplier was forced into administration, which resulted in the significant loss of funds. The Charity Commission has given the trust a six-month period to implement improved financial controls and governance measures, or it may face further regulatory action.

An independent review is now expected to be undertaken by the East London Mosque Trust to assess its governance framework and report back on the remedial steps taken. The regulator has also advised that the trust should take all reasonable measures to recover the lost funds, even though it appears unlikely that full recovery will be possible.

The trust has publicly stated that it, along with other investors, fell prey to a sophisticated fraud. It noted that despite performing due diligence at the time of the investment, the fraudulent practices employed were highly complex and are now under active investigation by local police. The trust also mentioned that it has already tightened its investment policies and strengthened internal processes following an earlier independent review, ensuring that its community services remain uninterrupted.

According to the Charity Commission’s Head of Compliance, the trustees’ lapse in ensuring robust oversight and thorough document review prompted the need for a formal warning. The Commission stressed that donors trust charities with their contributions, expecting them to be managed with appropriate care and in line with the organization’s aims. The trust is now under close observation as it works to address these issues.

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