Watchdog failing to halt charity fraud, say MPs

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Charity regulators are to be carpeted by Parliament's spending watchdog amid claims that they are failing to clamp down on malpractice.

Charity regulators are to be carpeted by Parliament's spending watchdog amid claims that they are failing to clamp down on malpractice.

The Public Accounts Committee will demand an explanation from the Charity Commissioners after an investigation by The Independent revealed delays and inaction in a string of cases.

Among those highlighted was the case of a care home charity in Cheshire whose residents lacked adequate food and clothing despite annual grants of £400,000. The commission is still investigating 15 months after staff blew the whistle, and the local health authority has been forced to step in and find new carers for the residents.

In a separate case, an MP has complained that a charity for landmine victims received hundreds of thousands of pounds to fit more than 1,200 artificial limbs per year in Laos, but actually fitted just 400 in its first two years. The Charity Commission said it had "no current concerns" about the organisation.

The commission also allowed one major charity, the National Confederation of Parent Teacher Associations, to re-employ staff who were at the centre of a major investigation into alleged breaches of charity law.

And it has allowed a cult which believes in witchcraft and demons, and whose Brazilian founder went to prison for fraud, to remain on its register for five years without raising any concerns.

David Davis, the chairman of the Public Accounts Committee (PAC), said yesterday that he intended to call in the commissioners to explain their record when Parliament returned this autumn.

His committee said two years ago that fraud and maladministration among Britain's 184,000 charities were going unchecked because of complacency, inertia and bad management at the Charity Commission.

"This is clearly a serious matter and relates to issues we have raised with them before. It seems to me they will have to come back to the PAC to explain what they have or haven't done," he said.

The committee found in 1998 that a third of charities were failing to submit accounts to the commission. Although that figure has now dropped to one fifth, there is evidence that charities could still commit malpractice without detection.

Although the number of charities has risen in recent years, from 152,000 in 1994, the number of formal inquiries by the commission has not. It dropped from 397 in 1994 to 194 in 1998, though it rose again to 255 in 1999. The number of Charity Commission staff has also dropped.

The Government has introduced a new code of conduct for charities receiving the £4bn in public funds which is spent by the voluntary sector each year. But many MPs believe it should go further. Helen Jones, the Labour MP for Warrington, has campaigned for an overhaul of charity law after delays in dealing with complaints about Integrate Services, which ran the Cheshire care homes in her constituency.

Charities which spend huge sums of taxpayers' money are still being run under rules set up to deal with small-scale groups, Ms Jones said. "The Charity Commission is far too slow in initiating investigations. They should be prepared, where necessary, to go in and take control," she said.

The Charity Commission said it was working to improve its record. It had set up a monitoring system which enabled it to spot problems at an early stage and therefore fewer formal investigations were needed, it said.