Report details clash of interests

December 15, 2006

An investigation by the Charity Commission has detailed how Regent's College and the European Business School made inappropriate payments of hundreds of thousands of pounds to a firm run by the woman who helped to rescue the prestigious London institutions from bankruptcy.

The Times Higher reported in early 2004 how Regent's College and its sister charity the EBS signed contracts to buy management services from two companies run by Gillian Payne, who was then president of the charities and a controlling governor.

In a report of its investigations published this week, the Charity Commission says: "It is vital that charity trustees avoid becoming involved in situations in which their personal interests may, or may be seen to, conflict with their duties as charity trustees.

"A charity is entitled to the objective judgment of its trustees, exercised solely in the interests of the charity and unaffected by any personal considerations."

In the 1980s, Ms Payne and her husband led a group to save the EBS from bankruptcy when their daughter was a student there. They provided a loan to save the charity and Regent's College.

They took over the running of both charities, overcame financial crises, turned losses into profits and won credit for bringing stability and success.

In 2001, the two charities signed contracts to buy management services from Mergeprine, a company of which Ms Payne was director and majority shareholder. The deal paid the company about £800,000 a year.

The Charity Commission report says: "In September 2001, the charities entered into seven-year management agreements with a commercial company.

The commercial company was linked to the corporations...

"For the year 2001, 'management charges' for both of the charities totalled £880,669."

The Charity Commission said that after its intervention governors were replaced and "agreement was reached that from February 1, 2004, the charities would retain 50 per cent of the monthly payments payable to the commercial company."

In July 2004, the charity trustees terminated the management deals with Mergeprine. Ms Payne stood down as president of the charities at this time.

In May 2005, the charities changed their governance arrangements "so as to optimise good governance".

A spokesman for the lawyers representing the trustees, Bircham Dyson Bell, said: "The trustees welcome this report and its findings, having previously sought its publication, and are confident that the current operation of both charities is consistent with best practice in corporate governance and totally compliant with Charity Law.

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