Inquiry into London-based evangelical church finds charity spent funds on gym memberships and other personal expenses, including over £95,000 on overseas trips

30 Mar 2023 11:05 AM

The Charity Commission has published findings of its inquiry into Rhema Church London which found serious misconduct and/or mismanagement had occurred.

Today (Thursday 30th March 2023), the Charity Commission has published findings of its inquiry into Rhema Church London.

The Commission concluded that the charity’s trustees had failed to fulfil their duties to protect the charity and its assets, and failed to demonstrate any effective oversight of senior staff leading to the serious misconduct and/or mismanagement, including misuse of funds and other assets.

Rhema Church London was established in 1999 to advance the Christian religion and provide education and relief of the aged, infirm and those in poverty. The charity operated an Evangelical Church in Croydon.

During the inquiry, the regulator found evidence that the charity spent approximately £95,000 on trips overseas without any authorisation or clear charitable purpose. The trips, to locations including Italy, Greece and Austria, were led by former pastor, Martin Phelps.

The inquiry also uncovered that day-to-day living expenses such as food, domestic purchases, medical bills, vets’ bills, and gym memberships, all of which appeared to be of a personal nature, were claimed and paid out by the charity in the absence of any expense policy or clear financial controls. The Commission determined the charity’s assets to be at risk and so took action to freeze the charity’s bank accounts in November 2015.

The inquiry also found that cheques totalling £300,000 had been paid to the charity’s former pastor between 2014 and 2015. £225,000 of the £300,000 had been transferred out of the charity’s account and placed into a personal account to reduce monthly mortgage interest payments before being transferred back to the charity. The regulator discovered that no guarantee had been obtained or security measures put in place prior to transferring the significant sum, placing the funds at considerable risk.

The regulator’s investigation also found that most of the charity’s spending was incorrectly categorised and lacked sufficient information to prove it was for charitable purposes. This failure resulted in the charity being liable to pay £543,285.82 in additional taxes. The charity also failed to submit accounts to the Commission on time for five consecutive years.

Due to the serious nature of the concerns, the Commission made use of many of its regulatory powers over the course of the investigation. In 2015, the regulator appointed Interim Managers (IMs) to address issues uncovered by the inquiry and review the charity’s day-to-day governance, as well as consider its future. The Commission disqualified the charity’s former pastor from being a trustee and/or holding any office or employment with senior management functions at any charity for 10 years. The regulator also used its powers to make an Order under section 76(3)(c)(i) of the Charities Act 2011 to sell three properties owned by the charity as part of efforts to settle the charity’s accounts.

Amy Spiller, Head of Investigations at the Commission, said:

Trustees must use their charity’s funds to further the charity’s purposes and ensure there are robust financial controls in place to stop the abuse of these funds.

From our investigation it was clear that trustees at Rhema Church London had failed to meet this obligation, leading to significant misuse of funds by a former senior employee. These expenses did not appear to serve any charitable purpose or benefit to the charity’s beneficiaries.

The Interim Managers worked at length to settle the charity’s accounts and I am pleased they were able to recover over £136,000 which could be put to good use at charities with similar purposes.

The IMs determined the most appropriate course of action was to wind down the charity, satisfy the charity’s creditors and to pass on any surplus funds to a charity with similar objects. Following the closure of the charity and settling of its finances, the IMs were able to recover £136,760.70 which was distributed to three nearby charities which all held similar charitable purposes.

Rhema Church London was removed from the register of charities on the 7th June 2022.

Notes to Editors

The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its purpose is to ensure charity can thrive and inspire trust so that people can improve lives and strengthen society.
The Charity Commission opened a statutory inquiry into the charity on 3 August 2015 over concerns including significant risk to the charity’s funds or other property, and concerns over misconduct and mismanagement. The inquiry report can be viewed here.

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