The above is the first part of the reply to a FOI request made to East Dunbartonshire Council (EDC) regarding their guarantee to fund The Lennoxtown Initiative (LI) charity’s debt.
Firstly there is an admission that EDC is ‘working with LI with a view to formalising the wind up of the organisation’.
Seconding the admission that there was no formal guarantee agreement from the EDC to fund the debts of the LI. Somebody from EDC connected with the LI charity put the ratepayers on the line for any debts the charity generated.
Note that EDC’s claim they only made a direct £68,377 payment to Celtic under the Celtic SLA but they don’t mention that EDC guaranteed the LI’s other payments that were made to Celtic under the SLA when there were no funds. Those payments are in the rest of the Celtic SLA deficit. The accounts show that the charity made payments of £166,834 which it didn’t have in it’s accounts to Celtic:
Overpayments from the Celtic SLA payments result in 50% of charity’s debt
East Dunbartonshire Council are owed £327,825 from the charity, as stated in the 2014 accounts:
and the Celtic SLA deficit, from above is £166,834. So 50% of the debt is as a result of the Celtic SLA payments.
Winding Up of The Lennoxtown charity
How arms length is this going to be since EDC have operated the charity in a ‘mothballed state’ since 2011? Not operating them very competently since the charity’s accounts for 31 March 2015 are well overdue and we are now in May 2016. How much has the charity further deteriorated financially since then? It could only have gotten worse.
EDC has a conflict of interest if it is running what was an arms length charity and trying to wind the charity up to collect their debts. An Administrator needs to be appointed and notices serves in The Gazette in Edinburgh. The Administrator has to arrange independent valuations of any assets especially land that might be sold to pay EDC or transferred to the EDC in lieu of the debt.
The winding of the charity should have happened in 2011 when it went into debt but the EDC guarantee allowed them to continue to get more into debt and what is happening now is an admission that the charity has been trading while insolvent since 2011. The Celtic SLA payments were given to Celtic every year until 2014 so the latter payments after 2011 were made while the charity was insolvent.
No formal EDC guarantee to The Lennoxtown Initiative charity to fund their debt
From the FOI reply above, there’s no formal written guarantee that EDC council signed with the charity. It’s unapproved by any council committee, there’s no audit trail and it has put the ratepayers of East Dunbartonshire on the line for £327,825. From LI 2014 accounts:
Who at the EDC gave the guarantee, when did it occur and did those persons have the powers to do so and whether it was approved by council.
Who are you going to call? Audit Scotland?
Remember that Audit Scotland gave the whole sham arrangement of the NHSGGC money that Celtic paid for Lennoxtown going back to them via the Celtic Service Level Agreement (SLA). Nothing to see here they said.
This was even though it ended up with a charity going into debt to the tune of £327,825 which was guaranteed by a Scottish public authority.
If Audit Scotland whitewashed the Celtic SLA what chance of their investigating a debt guarantee given by a Scottish council to an ‘arms length’ charity?
Note: Audit Scotland ‘audits’ all Scottish councils. Has this guarantee been missed when they audited EDC? Could be the reason Audit Scotland didn’t want egg on their face when they issued their report.
Office of Scottish Charity Regulator (OSCR) needs to investigate
Due to the lack of arms-length ‘arrangements’ being made between EDC and LI and the EDC guarantee the OSCR needs to be involved here to prove there was no collusion between the parties causing the collapse of the charity. The reputation of charities in Scotland is at stake here.
EDC has representation on the LI board (note: Celtic shareholder John Dempsey who has been on the board since the charity was created) in the latest annual accounts the related transactions sections says:
EDC has operated the charity in a ‘mothballed’ state since 2011 when the 3 full-time staff were sacked. This is when the debt started accumulating and payments to Celtic under the Celtic SLA payments continues until 2014 contributing to the charity going deeper into debt.
Lots of questions for Scottish authorities but will the public ever get the answers?