After a five-year-long investigation into the finances of United Kingdom (UK) branch of Christ Embassy, founded by popular mega-church pastor, Chris Oyakhilome, the UK Charity Commission has indicted the church's board of trustees of a wide range of fraudulent practices including illegally paying more than N827 million (£1,767,250) to entities and organisations it shares close relationships with.
According to the outcome of the inquiry published by the Charity Commission on its website last month, the church's board of trustees was incriminated for shoddy management of the church's account, arbitrary and curious payments, failure to comply with its grant-making policy, inadequate recording of its decision making processes and serious misconduct and/or mismanagement in the charity's administration.
In one particularly disturbing instance, the inquiry found evidence the church may be laundering or diverting funds of up to N288 million (£615,420.00) from its UK branches to six accounts controlled by the church's Nigerian branch, Christ Embassy Nigeria.
The Charity Commission also found that the church, which was founded in 1996 and has over 90 worship centres across the UK, illegally registered three properties in the names of two members of its board of trustees, failed to pay taxes worth over £250,000 on expenditures by employees, failed to secure adequate insurance, and had an instance of criminal violation of British town planning and building regulations.
In 2014, the Charity Commission, which regulates charities in England and Wales, announced it was opening a statutory inquiry to investigate Christ Embassy over "a number of serious concerns relating to the use of charitable funds, in particular, large connected party payments and the potential misapplication of grant funding."
The commission had originally interviewed members of the church's board of trustees and perused the records and books of the church for a year. Still not convinced that the church has prudently management its finances, it sidelined its board of trustees and appointed Rod Weston of the international audit and accounting firm, Mazar, as interim manager (IM) to take over the management of the church in what it described as "temporary and protective measure."
In the final report of the inquiry published on November 14, the interim manager stated that the scope of the inquiry was to examine the church's transactions with "partner organisations" including "grants made to a number of unidentified entities and Loveworld Television Ministry, Healing School, International School of Ministry, Christ Embassy France, Christ Embassy Canada, IPCC Conference and Rhapsody of Realities."
The inquiry also covers "the administration, governance and management of the charity by the trustees with specific regard to connected party transactions in respect of payments to Loveworld Limited and the management of conflicts of interest," its "financial controls and management" as well as "whether or not the trustees had complied with and fulfilled their duties and responsibilities as trustees under charity law."
Payments to "partner organisations"
After going through the church's account between 2009 and 2011, inquiry team found that its board of trustees paid substantial grants to organisations classified as "partner organisations" in clear violation of its own grant-making policy and the Charity Commission's regulation.
"During 2009-2011, the charity's accounts show grants amounting to £1,281,666 were paid to Loveworld Television Ministry; £118,995 to Healing School, £186,616 to International School of Ministry, £10,000 to Christ Embassy Canada, £10,566 to Christ Embassy France, £37,216 to IPPC Conference and £77,266 to Rhapsody of Realities," the report stated.
However, despite telling the inquiry team that its "grant making practice consisted of a discussion by the Trustees at a Trustee meeting regarding who should receive grant", the interim manager (IM) found no evidence of compliance with the said grant-making policy.
"Documents examined, by the IM, demonstrated a lack of records and receipts to account for grants made and there appeared to be little consideration given to whether the receiving parties had expended grants appropriately and for intended purposes, as was required by the policy.
"This demonstrates a failure to comply with its grant making policy and inadequate recording of decision making by the trustees which is misconduct and/or mismanagement in the administration of the charity," the report stated.
The inquiry particularly found the transaction with Loveworld Limited curious. The board of trustees told the interim manager that the company, which is owned by a trustee of the church, Obioma Chiemeka (2009-2015), with the objective to "advance Christian programming in the UK and to provide entertainment and educational programme on radio and television," was paid for broadcasting services. But when told to provide documentation of the decisions made by the board in relation to the payments to Loveworld, the church only provided two sets of minutes of trustees' meetings that appeared relevant to the issue.
"However, neither set of minutes included any decision or resolution to make payments to a company of which one trustee was sole shareholder," the report stated.
"The trustees did not have any formal contracts in place or indeed rationale for using Loveworld Limited as opposed to any other broadcaster," it added.
"During his inspection of books and records found no evidence to suggest that any of the trustees considered whether the costs charged by Loveworld Limited were better valued than the costs charged by any other service provider. The trustees have failed to take, or have failed to record, any proper decisions as to why such payments are in the best interests of the Charity," the report further stated.
The report stated that Christ Embassy had failed to follow a 2009 recommendation by auditors to seek professional advice on payment to related parties.
The inquiry also found that the church allowed Loveworld Limited to use its £1.8 million property for free between 2006 and September 2012. When queried about this, the trustees told the inquiry team that Loveworld Limited occupied a "small part of the premises" on an informal basis. They said Loveworld was subsequently charged £75,000 per year for the use of the property.
However, the inquiry stated that due to the level of rent Loveworld was subsequently charged, it must have occupied "a substantial proportion of the building". The inquiry also found that the church was subsidizing a proportion of Loveworld Limited's utility bills.
"These actions were not in the charity's best interest or in furtherance of its objects and were misconduct and/or mismanagement in the administration of the charity," it stated.
Payment to Ventaja Limited
The inquiry also discovered that in 2013, the church paid Ventaja Limited £44,925 for construction and decoration of a stage. It, however, found that the company was wholly owned by a member of the church's board of trustees, Tony Obi (2014 -2015), who was also a zonal pastor of the church. If further revealed that Mr Obi's wife, a director of Ventaja, was a pastor of the church and salaried employee.
"The IM found evidence indicating that Trustee G had employed the services of Ventaja Limited to provide services to the charity, but it was unclear from the charity's records what considerations were made regarding potential conflicts of interest. It is unclear to the Commission that the decision-making trustees, in position at the time payments were made, were acting only in the interests of the charity.
"The trustees failed to provide any records to evidence that conflicts of interest had been identified or correctly managed prior to the opening of the Inquiry," the report stated.
Possible money laundering and diversion of fund
The investigation identified nine active bank accounts, which the church's board of trustees claimed was holding funds belonging to Christ Embassy Nigeria, a separate entity from Christ Embassy UK. However, there was no evidence that the banks holding the funds were aware they were holding funds belonging to Christ Embassy Nigeria.
The report stated that the accounts were not named in a sure way to indicate that the funds were controlled from Nigeria. In fact, two of the nine active accounts were named "Christ Embassy East London".
Thus, the inquiry placed a freezing order on the funds (£615,420.00) in the account.
"The inquiry, not being satisfied that the funds held in these accounts were owned by Christ Embassy Nigeria, exercised legal powers and issued orders dated 8 august 2014, under section 76(3)(d) of the Act, freezing six of these nine bank accounts, protecting funds to a value of £615,420."
"In the absence of clear evidence to support the trustees' position, the Inquiry concluded that funds held in the accounts belonged to the charity and these accounts remained frozen until the order was revoked on 24 August 2016. The Inquiry being satisfied that the new board of trustees had assumed control of the charity's property discharged the freezing order on 24 August 2016."
The inquiry also discovered that the church maintained a shoddy tax record such as the failure to submit its self-assessment tax returns for 2010-2011 and 2012-2013 on time thereby incurring penalties.
It further found that the church did not maintain "sufficient records or processes to show that expenditure by employees had not been an employee benefit and therefore subject to tax;" as well as kept "sufficient records to show that charity vehicles were being used solely for charitable purposes and not used by trustees/employees for private use."
The interim manager agreed to pay £250,000 to settle these violations with Her Majesty's Revenue and Customs (HMRC).
The inquiry team also discovered 3 UK properties that were not disclosed by the board of trustees. The legal titles of the properties were vested in the name of two of the charity's trustees. When asked about the properties, the church's board of trustee claimed they "were acquired on behalf of, and held in trust for, Christ Embassy Nigeria".
However, the inquiry team "noted that the Land Registry entries in respect of the 3 properties made no reference to the beneficial owner being Christ Embassy Nigeria and documentation supplied by the trustees provided no evidence to support their assertions. None of the Land Registry proprietorship registers differed in any material way from those of the properties originally disclosed to the Commission as belonging to the charity.
"These matters were explored further by the IM. His investigations confirmed that the properties were held legally and beneficially by the charity and that there was no trust in place suggesting they were held on behalf of Christ Embassy Nigeria.
"The Inquiry obtained evidence that the trustees' failed to ensure land registry details for charity properties were amended once trustees resigned. This was raised a number of times by Auditors in their reports from 2009 onwards and as a result, the trustees failed in their duties and responsibilities as trustees to act in the charity's best interests," the report stated.
Inadequate insurance cover
Christ Embassy UK did not take proper insurance to protect the church's assets and protect against claims for accidental damage to properties/compensation for accidental injury to third parties, the inquiry found.
In one instance, the interim manager decided to pay an undisclosed settlement for a claim made by a member of the congregation who was injured at the church's premises.
"The failings of trustees to act appropriately left the charity open to financial and reputational risk and losses, as well as to risk of litigation."
The church continued to use a property as a place of worship without obtaining the necessary planning permission from the local authority.
Despite losing a couple of appeals to allow it use the property as a place of worship, the church continued its authorised use thereby exposing it to enforcement action.
"The IM team liaised with the Council to permit a planned exit from the premises which was vacated in January 2015.
"The existence of the enforcement notice is a criminal matter. Any breach of the enforcement notice and continued unauthorised use of the premises as a place of worship exposed the charity to prosecution by Southwark Council. Legal advice obtained by the IM confirmed that the breach could have led to criminal sanctions being imposed against the charity and potentially exposed the charity to confiscation proceedings under the Proceeds of Crime Act.
"This demonstrates the trustees' lack of understanding regarding planning law and regulations which exposed the charity to substantial financial risk as well as legal costs," the report stated.
Having found widespread evidence of misconduct and/or mismanagement, the interim management exercised its power to remove two of the trustees of the church (names not disclosed). However, the said trustees resigned before the commission could complete the process.
The report, however, said the loopholes that allowed trustees to be removed, which stops them from acting as trustees in the future has been closed by an amendment of the Charities (Protection and Social Investment) Act 2016 "thereby allowing the Commission to proceed to remove a charity trustee who has resigned following the Commission having given notice to the charity trustees of its intention to make a removal order."
The interim manager also appointed a new board of trustees for the church in 2016, having discharged his duty.
The interim manager also considered asking former trustees of the church to pay restitution for breaches of duties and losses the church suffered but decided against it after professional advice.
The full report of the Charity Commission inquiry on Christ Embassy can be read here.