The Charity Commission has recovered more than £2.1 million for a Golders Green-based charity following an official inquiry into its affairs.
It followed a loan made by the Reb Moishe Foundation for up to £2 million in 2006 to a company, Gladstar Ltd, which was associated with one of the trustees.
The foundation supports education and poverty relief.
By the end of 2013, Gladstar owed more than £2.3 million, including interest, to the charity, which was operating with just a single trustee – referred to in the commission’s inquiry report as Trustee A - after the death that year of a second trustee.
The commission said the charity’s funds had been placed at risk because the loan had been guaranteed by a company in Gibraltar, which was outside the jurisdiction of the UK.
It found that Trustee A had neither misappropriated funds nor benefited financially from the loan.
But it concluded there had been “serious misconduct” in the charity’s administration.
Trustee A has since stepped down and agreed not to be a trustee of another charity – an outcome accepted by the commission in view of “his age”.
Two new trustees have been appointed to the foundation and more than £2.1 million returned to it through the sale of properties by Trustee A.
Because of Gladstar’s financial position, the inquiry “did not consider it proportionate to seek payment of the outstanding balance on interest payments which were owed to the charity under the terms of the loan agreement”.