20/12/10

By Andrew Holt

The Charity Commission has published a report on its investigation into the international development charity, Muslim Aid, highlighting links between the charity and terrorism are unsubstantiated.

The Commission’s investigation was opened following the publication in a national newspaper of concerns that the charity had made payments to organisations allegedly linked to Hamas.

The Commission carried out an independent assessment of the issues raised and identified that, of the organisations named as being funded or otherwise supported by the charity, one - the Al-Ihsan Charitable Society - is designated in the UK, meaning that it is an offence to provide it with funds without a licence from HM Treasury.

The Commission’s own scrutiny of the charity’s 2005 accounts found that funds had been set aside for the Al-Ihsan Charitable Society during that year, but not paid.

The 2006 audited accounts did not state explicitly whether the funds had subsequently been paid.

The Commission was not provided with sufficient evidence to support the allegation that other named organisations funded by the charity had the alleged links, and consequently did not carry out further investigations into payments to them.

Given the seriousness of the allegations made, the Commission required material evidence in support of those claims in order for it to consider taking regulatory action.

The Commission opened a regulatory compliance case to investigate the regulatory concerns it had identified from the allegations.

The aims of the investigation were to establish whether the charity had made payments to the Al-Ihsan Charitable Society in breach of financial sanctions and to ensure that the trustees are managing and mitigating risks to the charity by ensuring appropriate policies are in place and implemented to safeguard the charity and its property.

The Commission’s investigation found that, although the charity had set aside funds for the Al-Ihsan Charitable Society, these were not subsequently paid.

This was as a result of the financial sanctions imposed on the Al-Ihsan Charitable Society after the decision to provide funding had been made.

On the evidence examined, the Commission concluded that the charity had not illegally funded the Al-Ihsan Charitable Society.

Within the scope of this investigation the Commission found no evidence of irregular or improper use of the charity’s funds or any evidence that the charity had illegally funded any proscribed or designated entities.

By publishing this report the Commission has given a public assurance that public allegations of links between the charity and terrorism in relation to the Al-Ihsan Charitable Society are unsubstantiated.

The Commission has also provided regulatory advice and guidance to the trustees to further strengthen the way in which the charity’s due diligence and monitoring procedures are applied and recorded.

The Commission’s report of the investigation highlights issues for the wider sector.

Trustees must ensure they and their charity comply with the law, including counter-terrorism laws.

They risk committing a criminal offence if they have financial dealings with an individual or organisation which is a designated financial target in the UK.

The Commission has published clear, practical guidance for trustees on this issue, protecting charities from harm: Charities and terrorism, which is available on the Commission’s website: Charitycommission.gov.uk

The report on Muslim Aid can be read http://www.charitycommission.gov.uk/Library/rcr_muslim_aid.pdf

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