The Charity Commission has closed down a Jewish education and heritage charity after three of its trustees were the subject of UK government sanctions.
The regulator launched an inquiry into the Genesis Philanthropy Group in March 2022, after three of its four trustees resigned due to being sanctioned by the UK government following Russian president Vladimir Putin’s invasion of Ukraine.
The commission said almost £1.5m of funds would be distributed to other charities with similar purposes.
The sanctions scheme enables the government to designate a person, which can result in the freezing of funds and economic resources of certain persons or entities involved in destabilising Ukraine, benefitting from or supporting the Russian government.
The inquiry report says that three of the charity’s four registered trustees, Petr Aven, Mikhail Fridman and German Khan, were designated under these sanction regulations as of March 2022.
All three of the designated trustees resigned from the charity that month, with the inquiry report saying this was the correct course of action.
“In the commission’s view the legal consequences of being designated make it impossible for a designated person to be a trustee,” it said. “This is because it is a criminal offence for funds or economic resources to be made available to a designated person.”
The inquiry also found that there was a risk the charity’s assets may also be sanctioned by the Treasury, since its primary source of funds was a donation of about £870,000 from the investment firm LetterOne, which was controlled by the designated trustees before their resignations.
To prevent this, the commission placed restrictions on the charity’s UK bank account and appointed Emma Moody, of the law firm Womble Bond Dickinson, as its interim manager to protect its assets and allow it to keep functioning.
The inquiry found that the receipt of funding from other entities, including LetterOne and associated companies, and the sharing of resources with them were a conflict of interest for the charity.
But these conflicts were not adequately identified or managed by the trustees, the commission found.
The inquiry report says that while the interim manager did not find that this caused a loss to the charity, it demonstrated a “lack of understanding and appreciation around the scope for conflicts arising and inadequate declaring of other business or personal interests”.
It says this meant certain conflicts might not have been identified in the first place. “This was misconduct and/or mismanagement in the administration of the charity by the trustees,” the report says.
The interim manager concluded that there were “significant challenges to the charity’s future viability” and the best course of action was to distribute its nearly £1.5m in remaining funds to similar charities and then wind it up.
Steve Roake, assistant director of investigations and compliance at the commission, said the regulator moved quickly to protect the charity’s funds.
He said: “The commission is clear that designated persons are unable to discharge the duties of trusteeship without committing a criminal offence and we acted accordingly.
“The £1.5m of recovered funds will now have the positive benefit they were intended to, funding a range of charitable causes, including to support those in need in Ukraine.”