THE trustee of a housing charity lent £13 million to companies in which he had an interest, a damning report has found.
A lengthy investigation by the Charity Commission found that Co Down businessman Derek Tughan used the money from Victoria Housing Estates to give loans - more than £12m of which were never repaid to the charity.
Victoria Housing Estates (VHE) was established by Mr Tughan's father Frederick in the 1950s to provide housing for people in need, including the elderly and people with disabilities.
An interim report by the commission, published this week, has revealed that Mr Tughan used the housing charity's money to:
- pay two of his relatives salaries of more than £3,000 a month for two years for "no known service"
- settle a £750,000 tax bill for his family
- give loans of more than £100,000, which were never repaid, to one of his relatives and an employee of one of his businesses
- pay his chauffeur, who also worked for one of his companies
- pay for his family properties in London.
The report also found potential conflicts of interest had not been properly disclosed. And it highlighted poor record-keeping, including a failure to keep minutes.
The charity manages more than 420 properties, including in Riverdale in Andersonstown, west Belfast, Harmin Estate in Glengormley, Co Antrim, and Worcester Avenue in Bangor, Co Down.
It also collects ground rent for around 600 properties and parcels of land.
The commission launched an inquiry into the charity in July 2012 after Revenue and Customs raised concerns.
Auditor PwC made the commission aware of its findings in December 2015, however they have only now been made public in the commission's report.
Mr Tughan was removed as a trustee from the charity after the commission was told about concerns.
The commission also wanted to remove two other trustees - Ronald Woods and Jill Robinson - but they resigned.
The charity's current trustees and the commission are involved in legal action to try and recover funds.
The new board has found it will take more than £21m to bring the charity's properties up to an acceptable standard.
It also faces a £2.8m tax bill because its assets were not solely used for charitable purposes.
Myles McKeown, the commission’s head of enquiries and compliance, said it had been a long and complex case.
"The VHE case is not closed and the commission acknowledges that the charity has suffered significant losses due to the previous management," he said.
"However, we can assure the public, and the charity’s beneficiaries that we, and the charity’s current board, are working to recover funds and ensure any remaining assets are used to fulfil the charity’s purposes.
"On conclusion of all legal matters related to this inquiry, it is anticipated that a more detailed final report will be produced."
Mr Tughan was once employed by leading Belfast law firm Tughans, which was set up by his father, but has not been involved with the company since the mid-1980s.
A spokesman for the Law Society said: "Mr Tughan is on the roll of solicitors in Northern Ireland and last held a certificate to practice in 2005".
Mr Tughan could not be contacted for comment yesterday.
However, the charity said all three people named in the report had been given an opportunity to comment.
Only Mr Woods disputed the report's accuracy.
"Mr Woods responded to say that he did not accept the contents of this report and to confirm that the litigation to recover alleged misappropriation is being defended," the report found.
In June 2016, Mr Tughan accused the commission of having "confiscated Tughan family property".
"One day you are in control, the next day you are on the street," he told the BBC.
He said Victoria Housing Estates and another housing rental company called Bangor Provident Trust had been converted to charitable status in the mid-1980s to avoid paying tax on profits.