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10.37 pm

The Parliamentary Under-Secretary of State for the Home Department (Mr. Tom Sackville): I congratulate my hon. Friend the Member for Corby (Mr. Powell) on raising this matter. I certainly confirm that I take it extremely seriously, and that his words will be drawn to the attention of the various agencies he mentioned.

As my hon. Friend said, charities have a very special place in our national life. They probably raise some£14 billion a year, and that shows a great deal of generosity. Overall, the voluntary sector thrives, and it depends on trust and good will, and on action that is motivated by generosity to others. When things go wrong, and particularly when it appears that the public's generosity is being exploited, it is a matter for considerable concern.

Through its support and investigative division, the Charity Commission aims to identify those areas of concern and take action. In many cases, that means helping those concerned to rectify errors, but the commission also has powers to investigate abuse of

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charity funds and to protect those funds when they appear to be at risk. I shall give a resume of what is known to me about the case that my hon. Friend has raised.

I understand that there are two parties: Roundgrant Ltd., a commercial company, as my hon. Friend has described, which was selling magazines with a representation that some parts of the proceeds would benefit a charity, the second party, the Roundgrant Society. The Charity Commission has taken a very close interest in the matter, together with the relevant local authorities and the police.

Having written to the charity inquiring about the amount of money reaching it from the sale of magazines and having not received a satisfactory reply, the Charity Commission took action early in November. It served on the charity trustees an order prohibiting them from entering into transactions on behalf of the charity, from raising any funds for the charity, and from making payments in the administration of the charity. The order was copied to the charity's bank, effectively freezing the charity's fund.

As I understand it, only some £3,500 out of the declared £43,700 sales by the company reached the charity. While each case must be treated on its merits--such margins may be appropriate in cases where the public are buying an item that represents fair value--I understand that in this case a very insubstantial publication, which my hon. Friend has already described, was being sold, representing almost no value for the £1 purchase price.

In those circumstances, I certainly share my hon. Friend's view that the venture may indeed be nothing more than one for private gain falsely masquerading as a charitable venture. If that is indeed the case, I share my hon. Friend's view of what those involved have been up to, and I am horrified to hear that the fraud has been perpetrated on the public.

As well as writing to the charity, the Charity Commission wrote to Roundgrant Ltd. drawing its attention to the new requirements of the Charities Act 1992, pointing out that, before selling magazines with a representation that part of the purchase price will benefit a particular charity, it must have a written agreement satisfying conditions prescribed in the Charitable Institutions (Fund-Raising) Regulations. The commission pointed out that the company's existing agreement did not meet those requirements, and that the company would be unable to obtain a new agreement, because the Charity Commission's order prevented the trustees of the Roundgrant Society from entering into any agreement.

Since then, the commission has become aware that the company appears to be selling an amended version of the magazine, collecting for general charitable purposes. Given what went before, that new activity obviously raised further alarm. The commission therefore wrote to the company seeking details of the new arrangements. Not having received a reply, the Charity Commission invoked its powers under the Charities Act 1993 late last week, and issued a direction to Roundgrant Ltd. demanding details of its finances.

Further steps depend on what action the company takes and what information is forthcoming, but the commission has extensive powers. Should the company be unwise enough to ignore the direction that it has just received, the Charity Commission can issue a further order, and, if necessary, seek its enforcement through the High Court,

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where possible sanctions include imprisonment. The commission is also maintaining its liaison with the police and local authorities.

We await developments with interest. My hon. Friend may, however, be interested to hear that the company's initial response has been to telephone the Charity Commission to inform the commissioners that it intends to close down its operation. Even if that is indeed so, the Charity Commission will have a continuing interest in the distribution of charitable funds that the company has raised.

I can reassure my hon. Friend that all concerned will be looking carefully at the case and the implications stemming from it. The new investigative powers of the commission and the new controls on professional and commercial involvement in charitable fund-raising have made an important contribution, and have enabled the commission to take a more proactive role.

I know from what my hon. Friend has said that he is critical of the degree of enforcement in this case, and--perhaps--of the powers and safeguards available. As to the law relating to charities, however, I hope that he will appreciate the difficulty of framing legislation which gives the greatest possible obstruction to bogus fund-raising, but which helps bona fide charities to raise

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the funds they need with the minimum of inconvenience and expense. We will, of course, keep this difficult balance under review.

Co-operation among the various agencies involved is essential, as such cases can involve several interests, and can require co-ordinated action to be taken. To strengthen such co-operation, it is our intention to issue a circular to the police, local authorities and others, summarising the new charities legislation, drawing to the attention of all those agencies the role of the Charity Commission and encouraging practical co-operation where that can be of use. These steps also emphasise the importance of vigilance and continued choice by the public.

Clearly, the message that must go out is that people should be willing to give to genuine causes but be wary of propositions that seem doubtful. If one is in doubt, one should ask the collector or seller for more information or decline to give. If it is thought appropriate, one should refer the matter to the police, the Charity Commission or the local authority.

My hon. Friend will agree that the case that he has brought to the House's attention is in the minority, but it is important that we have and exercise powers to investigate, and that we act as quickly as possible.

Question put and agreed to.



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