Commission finds ‘misconduct’ at former Cylch charity

The Charity Commission has found that there were “multiple instances of misconduct” around the administration of the former Welsh recycling charity, Cylch, which was mainly funded by the Welsh Government.

Cylch worked in the community recycling sector

Last week the Commission revealed to letsrecycle.com that it concluded an inquiry into Cylch in March this year.

Cylch primarily worked in Wales’ community recycling sector (picture: Shutterstock)

A statutory inquiry was opened into Cylch by the Charity Commission in 2013 – Cylch was founded by Mal Williams in 1997 and had 60 social enterprise members which carried out activities that ranged from kerbside recycling collections to furniture repair and sale. It also had around 40 ‘associate’ members such as local authorities. It was the umbrella body for community recycling organisations in Wales.

The Welsh Government was the main funder of Cylch. In July 2013 (see letsrecycle.com story) Cylch said that support from the Welsh Government for its future work was crucial to its survival following heavy financial losses. And, the charity highlighted how the Welsh Government backed its spending on two schemes which were eventually to lose the charity large sums of money. The government attended meetings of the Cylch trustees as a stakeholder.

Charity Commission

A Charity Commission spokesperson, on 29 July 2021, told letsrecycle.com: “Good governance is not a bureaucratic detail – it underpins the delivery of a charity’s purposes to the high standards expected by the public.

“Our statutory inquiry into Cylch has found multiple instances of misconduct and/or mismanagement in relation to the administration of the charity and concluded that the former trustees failed to manage the charity’s resources responsibly. We did not find evidence of any personal benefit, nor any indication that the trustees acted dishonestly.”

The former trustees failed to manage the charity’s resources responsibly

Cylch was removed from the register of charities and dissolved with no remaining assets in 2015.

The Commission spokesperson added: “After careful consideration, and given that the charity had been removed for a number of years, we determined that it was not proportionate to take further regulatory action or publish a report. Our inquiry closed in March 2021.”

The statutory inquiry examined issues including serious failings in the governance of the charity, conflicts of interest and substantial loss of charitable funds resulting from loans and investments.

Losses

The Welsh Government was the main funder of Cylch and attended meetings of the trustees

Financial losses highlighted in the charity’s accounts for 2011/12 – when it was forced to write off more than £2 million – had already put its future in doubt (see letsrecycle.com story). But the Commission’s investigation hastened the end of the charity.

At the time Cylch said in a statement: “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 Cylch’s activities or any of the companies or projects associated with Cylch.”

Disclosure

The disclosure of the Welsh Assembly Government and Charity Commission involvement came in January 2013, just days after Mr Williams stepped down from his role as chief executive of Cylch on December 31 2012. He was replaced by Richard Thomas as acting chief executive, (see letsrecycle.com story). Mr Thomas was the reuse coordinator for Cylch and was previously a sustainability coordinator for Bangor University.

Mr Thomas said then: “The investigations are not concluded involving the Welsh Government and Charity Commission. Until that process is concluded there is no further detail. We are hoping it will be concluded very soon. There are two investigations going on.”

Resignation

Mal Williams, former chief executive of Cylch

Mr Williams explained to letsrecycle.com in 2013 that his resignation was because he was now 67, “which is two years past retirement age”, and that he had been intending to retire for four of five years.

He added that he would remain a director of Cylch to provide support for the organisation until the speculation is satisfactory resolved.

Explaining how the investigation came about, Mr Williams said: “There are some concerns as I was a director of lots of companies we have been helping. We made a £5m investment in a plastics bottle recycling plant – Plastics Sorting Ltd, it was 60% owned by a social enterprise, the Cleanstream Group, something we set up as our development arm.”

He also noted: “We were acting in good faith and doing everything by the book.”

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