WALTHAM FOREST: Details of charity's financial meltdown emerge

First published in Your Local Areas East London and West Essex Guardian Series: Photograph of the Author by , Web Editor

THE EXTENT of the financial meltdown at a community development charity with close ties to Waltham Forest Council has been revealed.

A report by an administrator, brought in to rescue O-Regen in May, said bailiffs regularly turned up at the charity’s offices and suppliers refused to deal with the organisation.

Trustees at the charity, which has been running at a loss for a number of years, called in a forensic accountant in April this year after becoming concerned about unspecified “ongoing issues”.

The accountant said there were virtually no useful account files at the charity’s offices and found staff had not used a system to monitor expenditure.

No files detailing grassroots grants to local projects could be found, with £60,000 earmarked for 2011/12 described as ‘not available’.

The review said there were significant delays in financial reporting to the board, which was chaired by Conservative group leader Matt Davis and also featured Labour members Khevyn Limbajee and Terry Wheeler.

This left little time to take action on expenditure in the financial year.

The accountant concluded there was virtually no financial management at the organisation, with no system to monitor or control budgets.

Trustees suspended the three most senior member of staff following the publication of the accountant’s report.

Police also launched an investigation into the charity’s affairs are concerns were raised by Hackney Council.

The Guardian is awaiting an update.

The administrator said it is unlikely that a new management team will be found and predicts the charity will be forced into liquidation.

The charity owns the Paradox Centre in Chingford, the Epicentre in Leytonstone and parts of the Score centre in Leyton.

The administrator’s report said the charity is owed ‘considerable rent’ from one of its tenants at the Paradox, which include the police and charity Africa Stone Foundation.

O-Regen also owns The Click Centre in High Road, Leytonstone, and the Bell Centre in Holloway Road, Leytonstone, which is fully leased to Redwood pre-school for just £50 a month.

But the administrator reveals it also owns 12 ‘leasehold investment properties’, which provide rental income of £120,000 a year.

Waltham Forest Council paid the charity in advance for the provision of education at the O-Regen College at Webbs Industrial Estate in Blackhorse Lane, Walthamstow, until the end of this month.

The administrator estimates this cost at £20,000 a week.

The report also states that the charity was due to receive ‘substantial sums’ from the council for joint projects.

The administrator decided to keep services going at the site to prevent the charity being sued by the authority.

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Comments (10)

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5:17pm Thu 7 Jul 11

NT says...

Isn't it great to find everyone being so charitable to each other.
Over in this corner, we find O-Regen charging Redwood pre-school just £50 a month for the Bell Centre, and foregoing collecting anything at all from one of the tenants of the Paradox Centre.
And over in this corner, we find LBWF, with its usual largesse, paying its old friend in advance for the provision of education at the O-Regen College, Blackhorse Lane.
Against such felicity, that the LBWF final salary scheme is now owed £808,000 and the Grassroots Grants money has vaporised is mere quibbling.
Isn't it great to find everyone being so charitable to each other. Over in this corner, we find O-Regen charging Redwood pre-school just £50 a month for the Bell Centre, and foregoing collecting anything at all from one of the tenants of the Paradox Centre. And over in this corner, we find LBWF, with its usual largesse, paying its old friend in advance for the provision of education at the O-Regen College, Blackhorse Lane. Against such felicity, that the LBWF final salary scheme is now owed £808,000 and the Grassroots Grants money has vaporised is mere quibbling. NT
  • Score: 0

6:12pm Thu 7 Jul 11

mdj says...

There may be a tiny bit of method in the picture of fiscal madness presented here: subbing out functions to a charity is a widely used device whereby Councils avoid paying business rates on buildings to central government. This may generate considerable savings to us as Council taxpayers, if not as taxpayers in general .The 'losses' made up by LBWF may also be an under-the-counter-wa
y of subsidising charges such as rental of spaces to community groups, which if done in a different, more open guise we might support. But finally one's clutching desperately to find some small comfort from a picture of utter incompetence, and possibly much, much worse. It is pointless to imply that the trustees are some kind of innocent victim of others' failings: their precise task is to exercise oversight of the management (what management, you may ask), and they have failed abjectly from Day 1.
The key question for the future, assuming-as we never can in this Borough- that the existing mess is cleared up, is what security did the Council keep over the freeholds of this expensive portfolio of buildings? Why were freeholds granted at all? Why have local property developers been associated with O-Regen? Now that the 'consultation' exercise over library closures proposes closing Harrow Green, what amenities will be left in one of the least-favoured areas of the Borough, especially in view of the likely closure of Pastures Youth Centre?
There may be a tiny bit of method in the picture of fiscal madness presented here: subbing out functions to a charity is a widely used device whereby Councils avoid paying business rates on buildings to central government. This may generate considerable savings to us as Council taxpayers, if not as taxpayers in general .The 'losses' made up by LBWF may also be an under-the-counter-wa y of subsidising charges such as rental of spaces to community groups, which if done in a different, more open guise we might support. But finally one's clutching desperately to find some small comfort from a picture of utter incompetence, and possibly much, much worse. It is pointless to imply that the trustees are some kind of innocent victim of others' failings: their precise task is to exercise oversight of the management (what management, you may ask), and they have failed abjectly from Day 1. The key question for the future, assuming-as we never can in this Borough- that the existing mess is cleared up, is what security did the Council keep over the freeholds of this expensive portfolio of buildings? Why were freeholds granted at all? Why have local property developers been associated with O-Regen? Now that the 'consultation' exercise over library closures proposes closing Harrow Green, what amenities will be left in one of the least-favoured areas of the Borough, especially in view of the likely closure of Pastures Youth Centre? mdj
  • Score: 0

9:51am Fri 8 Jul 11

Mr Brittas says...

The whole thing is a mess but can we clear up one point. O-Regen does not own any part of Score and the demise of O-Regen will not affect Score unlike their other buildings.
The whole thing is a mess but can we clear up one point. O-Regen does not own any part of Score and the demise of O-Regen will not affect Score unlike their other buildings. Mr Brittas
  • Score: 0

1:16pm Fri 8 Jul 11

Sam Hain says...

My challenge to Cllr Davis, following his accusation in a posting to a previous article of Labour's "financial profligacy, illiteracy and basic stupidity", to explain how he had discharged his duty as an O-Regen trustee and its Chair to the trustee job description bullet point "To ensure the financial stability of the organisation" has so far gone ununswered. It is quite fair if Jonathan Bunn to point out in his article above that two Labour councillors were also on O-Regen's Board and they must answer the same question. However, I note that Cllr Davis and Mr Julian Martin, former CEO of O-Regen, sat together on the Local Strategic Partnership (LSP) Board:
http://www.walthamfo
rest.gov.uk/board-me
mbership11.doc How cosy.
My challenge to Cllr Davis, following his accusation in a posting to a previous article of Labour's "financial profligacy, illiteracy and basic stupidity", to explain how he had discharged his duty as an O-Regen trustee and its Chair to the trustee job description bullet point "To ensure the financial stability of the organisation" has so far gone ununswered. It is quite fair if Jonathan Bunn to point out in his article above that two Labour councillors were also on O-Regen's Board and they must answer the same question. However, I note that Cllr Davis and Mr Julian Martin, former CEO of O-Regen, sat together on the Local Strategic Partnership (LSP) Board: http://www.walthamfo rest.gov.uk/board-me mbership11.doc How cosy. Sam Hain
  • Score: 0

2:59pm Fri 8 Jul 11

NT says...

According to the administrator, the position with the Score is as follows.
O-Regen had a lease from Sports Club Orient (SCO) to run 'the community areas of the property'.
SCO was placed in liquidation on 26/01/11, and the liquidator subsequently disclaimed this lease.
O-Regen then sub-let parts of the building and 'receives rental income of approximately £100,000 per year'.
I'm not sure whether the sequence of events is quite right here, but the general drift surely must be correct.

Incidentally, it appears that sale of the Click and the Score are subject to 100 per cent clawback from their original owners.

Reading the documents that are now surfacing emphasises that the whole situation with O-Regen was a complete mess. There were a number of things going on. But it must not be forgotten that the accounts from 2003 onwards which O-Regen placed in the public domain clearly demonstrate that a car crash was inevitable, and so the key question as ever is: why did the trustees bury their heads in the sand?
According to the administrator, the position with the Score is as follows. O-Regen had a lease from Sports Club Orient (SCO) to run 'the community areas of the property'. SCO was placed in liquidation on 26/01/11, and the liquidator subsequently disclaimed this lease. O-Regen then sub-let parts of the building and 'receives rental income of approximately £100,000 per year'. I'm not sure whether the sequence of events is quite right here, but the general drift surely must be correct. Incidentally, it appears that sale of the Click and the Score are subject to 100 per cent clawback from their original owners. Reading the documents that are now surfacing emphasises that the whole situation with O-Regen was a complete mess. There were a number of things going on. But it must not be forgotten that the accounts from 2003 onwards which O-Regen placed in the public domain clearly demonstrate that a car crash was inevitable, and so the key question as ever is: why did the trustees bury their heads in the sand? NT
  • Score: 0

8:38pm Fri 8 Jul 11

mdj says...

'it appears that sale of the Click and the Score are subject to 100 per cent clawback from their original owners...
Phew! Glad somebody was awake. What about the Epicentre?
'it appears that sale of the Click and the Score are subject to 100 per cent clawback from their original owners... Phew! Glad somebody was awake. What about the Epicentre? mdj
  • Score: 0

9:23am Sat 9 Jul 11

NT says...

Re the Epicentre, the position is still to be clarified - at least in public.
Re the Epicentre, the position is still to be clarified - at least in public. NT
  • Score: 0

10:12am Sat 9 Jul 11

Sam Hain says...

And the Paradox? (Which organisation there owes 'considerable rent, by the way?)
And the Paradox? (Which organisation there owes 'considerable rent, by the way?) Sam Hain
  • Score: 0

11:25am Sat 9 Jul 11

NT says...

Paradox: ditto Epi.

Re the organisation that owes rent, the administrator states:

"This centre is fully leased to the Africa Foundation Stone and the Metropolitan police...Considerabl
e rent is outstanding with respect to one of the tenants and although demands for payment have been made, no response has been received. Consideration to instructing solicitors to advise on what actions to take and what, if any, proceedings to commence for recovery will be dealt with shortly".

Probably best to say no more.
Paradox: ditto Epi. Re the organisation that owes rent, the administrator states: "This centre is fully leased to the Africa Foundation Stone and the Metropolitan police...Considerabl e rent is outstanding with respect to one of the tenants and although demands for payment have been made, no response has been received. Consideration to instructing solicitors to advise on what actions to take and what, if any, proceedings to commence for recovery will be dealt with shortly". Probably best to say no more. NT
  • Score: 0

3:20pm Sat 9 Jul 11

Mr Brittas says...

Research shows the comments on the clawback in respect of the Epicentre, Click & Paradox are correct. If they are sold 80% of any money raised has to be given to the HCA. No part of Score can be sold as they (O-Regen) only have a sub lease. In regard to the Paradox debt, this would seem to be owed by the African Foundation Stone, whose Director Valentin is also an O-Regen Trustee and is still sitting on the Board of Trustees investigating the O-Regen crisis. Questions have to be asked about that, how can a Trustee owe large sums of money to a charity in debt. Incestous indeed
Research shows the comments on the clawback in respect of the Epicentre, Click & Paradox are correct. If they are sold 80% of any money raised has to be given to the HCA. No part of Score can be sold as they (O-Regen) only have a sub lease. In regard to the Paradox debt, this would seem to be owed by the African Foundation Stone, whose Director Valentin is also an O-Regen Trustee and is still sitting on the Board of Trustees investigating the O-Regen crisis. Questions have to be asked about that, how can a Trustee owe large sums of money to a charity in debt. Incestous indeed Mr Brittas
  • Score: 0

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