General Eva Burrows, head of the charity, moved to restore public confidence once its accountants, Coopers & Lybrand, established officers had made mistakes but had not acted illegally after becoming involved in an investment scheme that allegedly led to fraud.
Despite its dated image of uniformed 'soldiers' selling War Cry in pubs and collecting cash at brass band performances, the Army is an important provider of welfare - the largest in Britain after the Government - with a pounds 79m turnover.
General Burrows yesterday promised better training for officers, to introduce stringent safeguards against fraud and to accept more outside advice. A week after the charity said it had lost the money, the Independent disclosed it had ignored lay investment advisers.
The most senior officers blamed by the inquiry are Commissioner John Larsson, UK territorial commander, and Commissioner Ian Cutmore, chief secretary. Both leave next week. Lt-Col Ivor Rich, business administration secretary, moves to a post in America, and Lt- Col Grenville Burn, head of fund- raising and most closely involved in the deal, has been dismissed.
The charity brought in Coopers and the City lawyers Slaughter & May last autumn on finding dollars 8.8m entrusted to two financiers, Stuart Ford and Gamil Naguib, had gone missing. Mr Ford, 41, from Birmingham, and Mr Naguib, 64, a Canadian Egyptian, were named last month in a High Court writ demanding the money's return. Lawyers have recovered about dollars 1m.
The Charity Commission confirmed yesterday that it had launched an inquiry. General Burrows gave commissioners a copy of the Coopers report last Tuesday.
She said although officers had made mistakes, they acted sincerely. But she added that Col Burn had breached charity rules on investments and had failed to inform superiors when unilaterally handing over dollars 8.8m to Mr Naguib. He will lose his position as an officer of 27 years standing and an ordained minister, but he and his wife will be allowed to stay in their Salvation Army home in West Wickham, Kent, and he will be given counselling to start a new life.
The charity is suing Edge & Ellison, Mr Ford's Birmingham-based solicitors for 'knowingly assisting the fraud'. The action will be
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