Charity scandal: Fat-cat pay for bosses as just 13p in pound goes to kids

A £1 MILLION charity is being probed after The Sunday Post revealed it pays only a fraction of its income to the impoverished people it claims to help.

Our extensive investigation into mercy body Scotia Aid Sierra Leone has discovered it hands over just 13p of every £1 raised to good causes.

Despite bringing in more than £1m last year, just £137,000 was donated to the needy, while the lion’s share of cash was paid to a small number of fat-cat staff.

Today we can also reveal how:

• Three bosses paid themselves £313,000 from the charity’s coffers, using shell companies to minimise their tax bill.
• Whistleblowers claim that the trio use their income to fund lavish lifestyles that are in sharp contrast to the children they claim to help.
• Pay levels at the charity mirror some of the world’s biggest and best-known voluntary organisations.
• The leader of the Catholic Church raised fears about Scotia Aid four years ago but the concerns went unheeded by watchdogs.
• The charity is exploiting a business rates loophole which starves councils of much-needed income.
• Bodies investigating how Scotia Aid operates include South Lanarkshire Council and Scotland’s biggest local authority, Glasgow City Council.
• The Catholic Church and North Lanarkshire Council have also made fresh pleas for the Scottish charity regulator, OSCR, to investigate.

Scotia Aid was set up five years ago by chairman Dan Houston, 62, with the aim of improving lives in Sierra Leone.

Under his guidance, Scotia Aid has become a small but active member of the country’s thriving charity sector.

Its team now regularly throw swanky events nights’ and hosts golf days at some of Scotland’s top courses. It also has a hospitality box at Scottish Premier League club Hamilton Academicals, a team they sponsor, which it uses to entertain associates.

Scotia Aid claims to be battling to help re-build Sierra Leone, already shattered by civil war, which in the last year has been ravaged by the deadly Ebola disease.

Its profile has been boosted by appearances on STV and BBC Scotland. The charity’s project co-ordinator, Andrew Wood, took to the airwaves in October to ask for £8,200 to pay an air company to transport medical equipment to Sierra Leone.

Mr Wood told interviewers the charity “just couldn’t afford” the bill.

But its accounts obtained using freedom of information laws has revealed that its income stood at £1,020,365 in the financial year 2013/14, which is up from £790,000 the year before.

But just £137,000 was donated over the same period.

Another £313,000 went on consultancy fees to five companies associated with Dan Houston and two other trustees, Kieran Kelly and CEO Alan Johnston.

All the so-called “shell” firms have been registered to the address of the charity’s accountant.

Being paid via a limited company rather than the traditional PAYE allows the recipient to pay corporation tax of 20% rather than income tax of up to 50%.

In the last year a host of BBC stars reportedly including Jeremy Paxman and Fiona Bruce have been slammed for getting paid this way.

As well as the huge “consultancy fees” the trustees were also handed travel expenses of £43,314.

The charity’s highest earner was Mr Kelly, 32, who raked in almost £120,000.

His wages were around the same as the CEO of Oxfam, Mark Goldring, who manages 5,000 staff around the world and a £400 million budget.

Mr Houston enjoyed earnings of £104,000, which he was paid via two firms. Alan Johnstone was paid more than £92,000 via one firm. T

he accounts show Scotia Aid racked up more than £110,000 in telemarketing costs.

It also shelled out £105,720 on “logistics and travel expenses”, including six trips to Sierra Leone. The rest of its “charitable activities” included legal and professional fees totalling £16,023, motor expenses of £12,387 and subscriptions which cost £2,632.

It also spent £2,105 on entertainment and £1,623 on computer equipment.

The Sunday Post contacted two former charity members to ask them about working practices at Scotia Aid.

Bobby Florence, 57, a former trustee, claims he quit the charity after becoming suspicious about the amount being donated to good causes. “The public need to know what is being done under the auspices of charity,” he said. “They spend their money on a fancy lifestyle and fast cars. “Helping people is the last thing on their minds.”

Ex-founder Jackie Douglas, 70, claims she also quit over concerns about the way the charity was being run.

The retired finance worker said: “I left the charity when I became concerned about the way Dan was running it.

“It was all nights out, huge restaurant bills and big cars.”

Last night a charity expert branded the books “horrendous”.

David Craig, who has written a book on the charity industry, said: “The size of consultancy fees they are paying themselves is completely out of proportion to the size of the charity.”

Labour MSP Michael McMahon, whose constituency takes in Scotia Aid’s Uddingston base, said: “The Sunday Post are to be congratulated for raising legitimate concerns over the financial operation of this charity.”

The charity is based in Tannochside, Uddingston, which is in North Lanarkshire.

A spokesman for North Lanarkshire Council said: “We would expect OSCR to take action against any charity that was deemed to be conducting their business activities in a manner that would conflict with the ethical objectives of their organisational remit and suspend the registration pending a full investigation.”

A spokeswoman for Police Scotland said its economic unit was aware of the organisation. But she added: “At this time, Police Scotland are not actively investigating Scotia Aid.”

A spokesman for OSCR said: “We would not comment on investigations into individual charities.”

We approached Mr Houston, whose charity’s previous accounts also showed an extremely low donation to income ratio, on Friday.

He said: “I’ve got no comment to make about this.”