Charity wound up after business rates scam

A charity has been wound up after its trustees used it to avoid paying business rates on property they owned. Achiezer, a poverty and education charity based in Bury, made payments totalling £129,800 to Dasim Partners – a property development company owned by two of Achiezer’s trustees, Sidney and David Chontow. The Charity Commission launched an inquiry into the charity in 2015, after an earlier audit found that serious misconduct and mismanagement had taken place. The inquiry concluded that the trustees had not managed the conflicts of interest, as there were no independent trustees and the basis of these payments was unclear. The regulator concluded that Sidney Chontow had obtained personal benefit from the arrangement under a business rates avoidance scheme. Potential Investment Portfolio, of which Sidney Chontow was a partner, attempted to avoid paying £59,000 of business rates to Bury Metropolitan Borough Council by letting out property to the charity. Potential Investment Portfolio would be liable for business rates on an empty property, whereas property used for charitable purposes is exempt. The charity became liable for the business rates when it was found that the property was not used solely for charitable purposes and therefore was not entitled to an exemption. The inquiry also found the trustees failed to properly manage the charity’s funds and did not distinguish between the charity and other entities with which they were connected, including the property companies. The trustees, it said, “did not effectively manage conflicts of interest, allowing numerous complex transactions to be made to related organisations and their personal company’s”. Sidney Chontow has now paid the outstanding business rates to Bury Council and the charity’s remaining funds, amounting to more than £400,000, have been distributed to charities with similar charitable aims. Amy Spiller, the Charity Commission’s head of investigations, said: “The Chontows abused their position as trustees, to derive personal gain for themselves and their businesses to the detriment of the charity. It is right that they were removed as trustees, and that this charity has ceased to operate.” To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews