Funds inquiry launched into Royal charity

A CHARITABLE trust set up by the Princess Royal is being investigated for possible misuse of funds.

The Scottish Charities Office (SCO), which has powers of prosecution, has asked for details of the accounts of the Princess Royal Trust for Carers. The office is understood to be concerned about the amount spent on administration. This follows two reports in the Independent which revealed that the trust spent about pounds 1.5m in its first three years, with only pounds 263,000 going to charity.

The trust, which was registered in Glasgow in May 1990 and provides money for projects helping people who care for others, has been asked to account for expenditure for the year ending 31 May 1992. As the Independent reported in December, the trust was given about pounds 591,000 in that year, and spent pounds 679,000 on administration, but not a penny on charity. Costs included pounds 33,718 on 'corporate identity', more than pounds 32,000 on travel, pounds 109,500 on publicity, and pounds 138,000 on fund raising. It was left with a deficit of about pounds 88,000.

This financial year it expects to spend pounds 612,000 on administration and pounds 263,000 on charity, with a deficit of more than pounds 290,000. Charities' administration costs are usually 5-20 per cent of budget.

The trust plans to spend pounds 729,000 on administration in 1993/94 although it has pledged to reduce those costs to 15 per cent of budget. To do this it will have to raise about pounds 5m in that year.

The SCO, part of the Crown Office which deals with all prosecutions in Scotland, wrote to the trust earlier this month. A spokesman for the SCO refused to comment on an individual case. But a source close to the inquiry said the investigators were particularly interested in money spent on corporate image and fund raising.

A trust spokeswoman said: 'Accounts have been submitted and there's been some correspondence following the accounts. We have provided all the information we have been asked for.'

Many charity leaders are dismayed that so much is spent on administration; the trust argues that start-up costs are always high and that its strategy of spending large sums of money to attract big donations is starting to work. They are also concerned by the amount British Telecom has donated to the trust from its charitable budget. They fear that the trust receives preferential treatment because Iain Vallance, chairman of BT, is also the chairman of the trust's committee of trustees.

The trust has received pounds 1,320,000 from BT. Mr Vallance has also donated pounds 240,000 of his BT bonuses. BT agreed to give the money under conditions revealed in private correspondence between the trust and BT. These include: 'BT would not wish for publicity until the trust has a more robust footing'; 'BT would withdraw from association with the trust, should there be extended unfavourable publicity for the trust'; and 'The trust will not approach Mercury Communications (BT's rival) for sponsorship.'.

A BT spokesman said: 'It is entirely wrong to suggest that there was significant disagreement in the BT Charities Committee on the decision to support the trust . . . the committee was unanimously in favour . . . We are very happy with the progress the trust is now making.'