The Charity Commission has opened inquiries into two connected charities funding educational institutes in Israel amid “significant concerns” of poor financial management, including the use of pre-signed blank cheques.
The regulator said it had opened statutory inquiries into the Telz Talmudical Academy and Talmud Torah Trust and The Gevurath Ari Torah Academy Trust, which each have the same three trustees.
But a trustee at the charities told Third Sector that the inquiry was unnecessary and that there was “no poor management at all” at the charity.
The commission said its concerns related to financial management and controls within the charities, after it discovered that one trustee, who lives in Israel, was in possession of the charities’ cheque books containing a number of blank cheques pre-signed by UK-based trustees.
The commission said in a statement that the charities also operated heavily in cash overseas – which the regulator advises against – and that they did not maintain adequate records that they were monitoring or verifying the end use of the charities’ funds abroad.
“These significant concerns required further scrutiny, so the Charity Commission opened inquiries into the two charities on 17 July 2023,” the regulator said.
The inquiries will examine the administration, governance and management of the charities by the trustees, the financial controls and management of the charities, and the trustees’ conduct, although the regulator said it may extend this scope if additional regulatory issues emerge.
After opening the inquiries, the commission made an order prohibiting the trustees from carrying out several financial transactions, including withdrawing charitable funds in cash and pre-signing cheques.
Rabbi Yaakov Chanoch Baddiel, trustee at the charities, told Third Sector that he had been asked “loads and loads” of questions by the Charity Commission and that it informed the regulator that it should desist from pursuing an inquiry because it was likely to be unnecessary.
“I do not see any reason why public funding should be spent on this inquiry,” he said. “There’s no poor management at all – everything is fine.”
He said the charity operated in cash because it wanted to avoid costly bank fees and lengthy waiting times.
“We get our money in cash because we pay cash to our students for their bursaries because many of the students don’t have bank accounts,” he said, adding: “We as trustees don’t take any money.”
Mr Baddiel said that he had told this to the commission’s case officer but that he “seemed to have a bad memory”.
“Hold the horses but I think what will transpire is that we are doing good work,” he said.
“It may be that we’re not doing it the way the Charity Commission would like us to do it but I told the case officer that he’d need to make an allowance for us because the donors won’t allow us to use the banks.”