A prominent international Muslim charity failed to carry out proper checks to ensure it was not handing out money to terrorist or extremist organisations, according to an official report published on Thursday that detailed a raft of management failures.
Former management and staff at Muslim Aid – a group which operates across some 70 countries and raised nearly £35 million in 2014 – failed to complete basic due diligence checks to ensure partners and recipients of donations were not on government lists of banned groups.
A five-year investigation and monitoring programme of the UK-registered charity found no evidence of money going to proscribed organisations but said that was down to “good fortune” rather than sound financial practice.
During the investigation, sparked by concerns over practices at field offices in Sudan and Gambia, regulators from the Charity Commission also found:
:: Muslim Aid in Sudan bought medicine from a company part-owned by the charity’s former country director.
:: Staff in field offices were lent money without any documentary evidence to show that it had been repaid.
:: The charity failed to ensure that its logo was not used by other groups to collect money in its name.
The findings led to an overhaul of management and a new chief executive brought in to improve the running of the 32-year-old charity. The Charity Commission said it did not find any documentary evidence of financial loss.
“Our inquiry found systemic failings of oversight, management and governance,” said Harvey Grenville, head of investigations at the Charity Commission, the UK regulator.
“These findings would be concerning in any charity – but they are especially worrying given the size, importance and reach of Muslim Aid.”
The charity was set up in the mid-1980s in response to famine in Africa and now runs emergency aid and development operations across Africa, Asia and Europe with 13 operational field offices. It is currently carrying out vital relief work in places such as Syria and Gaza and helping the Rohingya victims of security forces in Myanmar.
The Charity Commission had previously investigated Muslim Aid in 2010 after media claims that it had funded a group with alleged links to Hamas. The regulator found no evidence that it had illegally funded a banned group but was unable to demonstrate conclusively that Muslim Aid followed “its own due diligence and monitoring procedures consistently”.
Despite those conclusions, the latest inquiry opened in 2013 found that Muslim Aid had failed to properly check relevant government websites and databases to ensure organisations it was dealing with were not on banned lists.
The inquiry report said that it was “thereby exposing the charity to the risk of unwittingly funding a proscribed organisation…. this demonstrated a clear lack of prudence”.
The report found that the charity had failed to put in place recommendations following the 2010 inquiry and suggested that trustees or senior managers had provided the inquiry with misleading information. The lack of action “was not adequately explained”, the Charity Commission added.
The inquiry led to the regulator installing an outside manager to take over the running of the charity in 2016 before a new board was put in place earlier this year. The regulator said the charity was making “significant progress” after the changes.
In a statement, Iftikhar Awan, chair of Muslim Aid trustees, said the charity had been through a “challenging” period but were "now moving forward .... with much greater accountability and transparency, to ensure that good governance underpins the new organisational structure.”