The Charity Commission has issued an official warning to the East London Mosque Trust after the charity lost nearly £1 million in an investment that went wrong. The regulator said the charity had failed to properly manage the financial risks linked to this investment, which resulted in a significant loss that could have been avoided.
The incident came to light after the East London Mosque Trust invested over £1 million of charitable funds into a company called “MRR Investments Ltd” between 2015 and 2019. This company was set up by a former employee of the mosque and claimed to offer halal investment opportunities. However, the investment turned out to be poorly managed and highly risky. In 2020, MRR Investments Ltd went into liquidation, and most of the money could not be recovered.
The Charity Commission launched an inquiry to examine how the trust made these investment decisions and whether it had fulfilled its responsibilities as a charity. After a detailed investigation, the commission found that the trustees had not done enough due diligence before making the investment. They did not take professional advice, failed to understand the risks involved, and trusted someone with close ties to the organization without proper checks.
The commission also said the trustees did not properly monitor the investment over time and did not take appropriate steps even when problems started to appear. They continued to send money to MRR Investments without evidence that the company was doing well or providing clear financial updates. This lack of oversight and poor judgment ultimately led to a major financial loss.
While the East London Mosque Trust is well known for its work in the Muslim community and has supported thousands of people through its religious, educational, and social activities, this incident has raised concerns about its internal governance and decision-making. The loss of nearly £1 million could have had a big impact on the services and programs the charity provides to the public.
In response to the Charity Commission’s findings, the East London Mosque Trust accepted that mistakes were made. The trust said it regrets the decisions made at the time and has taken steps to improve its financial management. This includes hiring independent advisers, reviewing its investment policy, and ensuring better oversight of future decisions.
The Charity Commission’s warning is meant to serve as a formal notice that the charity must take its legal duties seriously and avoid similar mistakes in the future. If the trust fails to improve its governance or make necessary changes, further action could be taken.
This case highlights how important it is for charities to manage donations and charitable funds responsibly. Trustees are legally required to act in the best interests of their organization, which includes carefully managing money and avoiding unnecessary risks. Investing money without proper planning, checks, or professional advice can lead to serious consequences, as seen in this situation.
The commission also reminded other charities to learn from this case and ensure that they have strong internal controls, clear investment strategies, and access to expert advice. Trustees must also be willing to ask questions, challenge decisions, and remain alert to warning signs when managing funds.
In the end, while the East London Mosque Trust has taken some corrective actions, the official warning serves as a reminder to all charity organizations that trust from the public depends on good financial decisions and transparent management. When charities lose money due to poor oversight, it not only affects their ability to deliver services but also damages public confidence in the charitable sector.
This incident is a wake-up call for trustees and charity leaders across the UK. Charities handle large amounts of money that come from generous public donations, and it is their duty to protect those funds. Poor financial planning, even with good intentions, can lead to losses that impact the very communities they are trying to support.
The Charity Commission has said it will continue to monitor the East London Mosque Trust to make sure the recommended improvements are followed through. The charity’s future reputation now depends on how well it responds to this warning and whether it can restore confidence among its supporters and the wider community.
