An “accounting error” was one of the reasons for the downfall of Coventry City of Culture Trust, according to a new report from the National Audit Office.
The report, published on Tuesday, outlines the reasons the charity collapsed in February after receiving £22.8m in funding from the Departure for Culture, Media and Sport and its arm’s-length bodies.
It also came less than a year after three of its senior leaders received honours from the Queen.
Having been set up in 2015 to oversee Coventry’s bid to be UK City of Culture for 2021, and its subsequent activities, Coventry City of Culture Trust was supposed to continue operating to preserve the legacy from its year in the spotlight, but instead went bust owing thousands to other charities.
The report states that the trust “identified an accounting error in August 2022 which negatively affected its finances”.
It also refers to lower-than-envisaged ticket sales for events having put pressure on the trust’s finances, as well as increased costs incurred because of the Covid-19 pandemic.
It does not say how much the accounting error cost the charity, which had estimated debts of at least £4.1m when it closed, according to financial documents published with Companies House.
The NAO report confirms that the DCMS and its arm’s-length bodies awarded £22.8m to the trust, of which £12m was funded by central government and £10.9m from the National Lottery.
It says most central government funding was awarded to the trust either directly by the DCMS or by Arts Council England.
It also says Arts Council England – which was put in charge of most of the financial monitoring, with an ACE representative attending the trust’s trustee meetings – was advised by the trust as early as August 2021 that it was facing “acute financial difficulty” and had a projected £500,000 cash deficit.
The charity said at the time that it would struggle to remain a going concern.
Speaking in parliament last month, Taiwo Owatemi, who is the Labour MP for Coventry North West and a trustee of the Albany Theatre Trust, one of four UK charities collectively owed about £140,000 by Coventry City of Culture Trust when it shuttered, said the collapse of the charity had “shocked and infuriated” many.
“Millions of pounds of public money may never be recovered and the plans for an ongoing legacy are having to be rewritten from scratch,” she said.
Owatemi said it was clear that something went “deeply wrong” with the management of Coventry City of Culture Trust and accused the charity’s top team of repeatedly rebuffing and ignoring local knowledge and offers of help, “thinking instead that it knew better and bringing in so-called experts who knew nothing about our city”.
She continued: “How on earth can it be justified that Martin Sutherland, the former trust chief executive officer, was granted an OBE for his work leading the organisation?”
Sutherland, whose LinkedIn profile suggests he is now HR manager at another charity, the Crafts Council, was one of three figureheads at the trust who received awards in the 2022 Queen’s Birthday Honours List. The trust’s former creative director, Chenine Bhathena, and then-director of audience strategy, Laura McMillan, also received MBEs.
“The sums involved are staggering,” Owatemi said, claiming that when Sutherland was chief executive, he gave Coventry City Council guarantees that the charity could meet its obligations.
The council faces potentially having to write off £1.6m in public money.
Owatemi accused the charity of having “leadership without any interest in local people, and incompetent money management”, which she said had had dire consequences.
The NAO report notes: “Several other organisations are investigating the trust’s insolvency, including the administrators, who aim to understand how the trust became insolvent, and the Charity Commission, which is conducting a compliance investigation of the trust. This briefing is intended to complement the other reviews.”