In a statement released this afternoon (July 31) Cylch has confirmed that it will not apply for further government funding and that all eight of its staff will be made redundant, after being notified that it is now going to have to face an investigation by the Charity Commission. Cylch has strongly denied any wrongdoing.
The Commission enquiry follows an investigation into the organisation by the Welsh Government, beginning early in 2013, over allegations relating to the loss of charity funds and conflicts of interest over its involvement with the Plastics Sorting Ltd plant, which received grants totalling 1.3million from the Welsh Government. Plastics Sorting Ltd went into administration in February 2012 (see letsrecycle.com story).
Conclusions of the nine month investigation by the Welsh Governments Internal Audit Services have not been made public, but according to Cylch, neither the organisation nor any associated individuals were implicated in any criminal activity or inappropriate financial gain as a result.
Funding
But, Cylch’s vice chairman Richard Northridge told letsrecycle.com that the decision has been taken taken not to apply for further grants as the Welsh Government is unlikely to allocate funding to an organisation while it is under statutory investigation.
He said: “With the announcement that the Charity Commission is opening a statutory investigation and Cylch’s application for funding due to go before the government in the first week of September we were realistic enough to know that a minister would not be able to approve funding for an organisation that is under investigation.
‘We were realistic enough to know that a minister would not be able to approve funding for an organisation that is under investigation.’
Financial losses highlighted in the charity’s accounts for 2011/12 – when it was forced to write off more than £2 million – had also put its future in doubt (see letsrecycle.com story).
Meanwhile, in a statement published by the organisation today, it said: “It is very important that Cylch members, our sponsors and the wider public understand that the investigations into Cylch do not include any matters that are criminal in nature, any misappropriation of funds or inappropriate personal gain from Cylchs activities or any of the companies or projects associated with Cylch.
The report of Cylch’s annual accounts for 2011-12 was published in May 2013 and highlighted some important issues, including regarding Cylch’s ability to continue as a going concern.
Following the announcement, a Welsh Government spokesperson said: “We are aware of today’s announcement by Cylch and that the Charity Commission has opened a Section 46 inquiry into Cylch. It would not be appropriate for us to comment further on these developments until the Charity Commission’s inquiry has concluded.”
Future
Without grant funding which totalled around £300,000 in 2012/13 – the organisation will be unable to continue its work in the third sector, but it will continue to exist as a limited company with ownership of assets from the Plastics Sorting Ltd venture.
Cylch’s trustees Mike Croxford, Richard Northridge, Robert Alexander and Peter and Mal Williams will oversee that its outstanding obligations to the Welsh Government are met, and have also begun an internal inquiry into the issues raised by the investigations. When contacted by letsrecycle.com in June Mr Croxford said he had had little involvement with the organisation due to ill health.
The development of the Plastics Sorting Limited plant was heavily supported by the then chief executive of Cylch – Mr Williams, who became chair of Plastics Sorting Ltd.
Ahead of the launch of the plant in April 2010, Mr Williams described the success in developing the plant as the culmination of a dream held for over 20 years to start closing the recycling loop in Wales.
However following what was described as an unforseeable downturn in the plastics market the plant was put into administration and subsequently sold to Irish owned firm Viridis Plastics Ltd, which itself went into liquidation in May 2013 (see letsrecycle.com story).
Cylch was founded by Mal Williams in 1997 and had around 60 social enterprise members which carried out activities ranging from kerbside recycling collections to furniture repair and sale. It also had around 40 ‘associate’ members such as local authorities.
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