'Orderly exit' for Awema after ministers axe funding
- 9 February 2012
- From the section Wales
The chair of a controversial race relations charity said she would preside over an "orderly exit" for the organisation after its funding was terminated.
An investigation found "significant and fundamental failures" at the All Wales Ethnic Minority Association (Awema).
A Welsh government and Big Lottery Fund report said there was a "fundamental lack of control" at Awema.
The findings are being considered by the police.
Finance Minister Jane Hutt said the government had taken "decisive action" by terminating the funding.
The Wales Audit Office will carry out what Ms Hutt called a "thorough and independent review" into the history of funding to the charity.
The Charity Commission said it had opened a statutory inquiry.
Thursday's report says there was a "complete lack of oversight of the financial processess and controls" at Swansea-based Awema by its chief executive Naz Malik.
It says the charity's funds were used to pay for gym memberships for staff worth £2,120, £800 was spent on rugby and cricket tickets and a £110 parking fine for Mr Malik was paid.
'Conflict of interest'
There was a "clear conflict of interest" because one of the charity's directors reporting to Mr Malik was his daughter Tegwen, it says. There were "considerable increases" in her salary from £20,469 to £50,052.
An earlier report, commissioned by the charity's trustees, said Mr Malik used funds inappropriately and paid off credit card debts worth £9,340.
It also alleged that his salary was increased to £65,719 without approval from the board.
Mr Malik has declined to comment while investigations are carried out.
The charity's chair, Dr Rita Austin, who has defended its actions, said the report pointed to a lack of internal financial control and poor governance by Mr Malik, Awema's trustees and its now-suspended finance director.
Awema handles more than £8m of public money.
Its board is due to meet on Friday and next week to discuss what its chair called a "substantial and serious" report.
Dr Austin said the main consideration was Awema's obligations to its project partners and staff.
She said eight trustees had already resigned.
"The six who remain on the board, including myself as the chair, together with the CEO [Mr Malik], remain on watch to address the issues raised," she said in a statement on Awema's website.
"All of us who continue to serve on the board at Awema - myself as chair, continuing trustees and CEO will carry out our responsibility to manage an orderly exit for the only minority ethnic development organisation which works across Wales.
"We are opening discussions with officials to this effect."
The Welsh government has been under pressure from opponents over the funding it has paid to Awema.
A former chairman resigned after complaining to the Welsh government about the way the charity was run in 2007. Three years earlier, a critical report said Awema should receive no further funding until it demonstrated improved project and performance management.
Wales' top civil servant, permanent secretary Dame Gillian Morgan, has said that Awema should have been rated "high risk".
Ms Hutt said: "The report today shows significant and fundamental errors in terms of Awema - hugely disappointing but decisive action today to stop their funding.
"It's very important that the report is fully in the public domain.
"The Charity Commission and of course the police now can take action and of course it's not for me to comment on the kind of action they might take."
She added: "I will stand up too and be answerable to the review and to the questions that are put."
South Wales Police is studying the report, saying it was "currently being considered."
Opposition politicians have sought assurances that the Welsh government's investigation into Mr Malik was not compromised by his links to the Labour Party.
First Minister Carwyn Jones has said his administration has "nothing to hide" over Awema.
Welsh Labour said on Thursday that Mr Malik and his daughter have been suspended from the party "pending the outcome of an internal enquiry".