East London Mosque Rises to Challenge After £1M Fraud

Regulatory action has been taken by the Charity Commission against the East London Mosque Trust, addressing concerns about the responsible management of charity funds.

The esteemed East London Mosque Trust (ELMT) has released a statement confirming it was the victim of a sophisticated fraud, which led to the loss of a £1 million investment. This revelation comes as the Charity Commission issued an official warning to the Trust for what it termed a "failure to responsibly manage" charity funds and a lack of "reasonable care and skill" by trustees at the time. The ELMT, which manages the renowned East London Mosque, is now taking significant steps to strengthen its governance and financial oversight in the wake of this incident.

The incident stems from an investment of £1 million made by the East London Mosque Trust in an NHS-approved supplier. The charity had anticipated a 20% return on this investment within six months. However, the supplier later went into administration, resulting in the substantial loss of funds for the charity. The ELMT has unequivocally stated that it, along with other investors, was a "victim of a sophisticated fraud," and that the company involved is now "the subject of an ongoing police investigation."

The Charity Commission's official warning, issued under section 75A of the Charities Act 2011, highlighted concerns regarding the due diligence conducted on the investor, personal guarantors, and connected parties. The Commission’s investigation found that the trustees at the time had not exercised adequate oversight of the charity’s activities related to the investment. The Commission noted that it had previously advised the charity on ensuring sufficient control over its funds.

In response to the warning, which mandates action within six months, the East London Mosque Trust has affirmed its commitment to implementing robust changes. The ELMT had already proactively reported the matter to the Charity Commission in February 2023. Following an independent review, the Trust has already implemented "a stricter investment policy and strengthened its governance and processes." Furthermore, the ELMT has committed to implementing any further directions or recommendations from the Charity Commission, underscoring its dedication to effective stewardship.

The Trust’s statement emphasized its long-standing commitment to the community, reassuring that "there was no interruption to the Mosque’s services or activities." The ELMT continues its vital work, including recently completing "major expansion works to the prayer halls," demonstrating its ongoing investment in serving its community.

While the Charity Commission's Head of Compliance Visits and Inspections, Joshua Farbridge, stressed the importance of trustees managing donated funds with care, the ELMT's proactive response and clear declaration of being a fraud victim highlight their efforts to rectify the situation. The regulator expects the ELMT to make every reasonable effort to recover the lost funds, although it acknowledges that full recovery may be unlikely.

The East London Mosque, founded in 1910, holds a significant place in the community. This unfortunate incident has prompted the Trust to reinforce its financial controls and oversight mechanisms, ensuring the protection of its assets moving forward. The ELMT's swift and transparent actions demonstrate its dedication to accountability and its ongoing mission to serve its vibrant community effectively.

The East London Mosque stands as a pivotal institution within the British Bangladeshi community, particularly in Tower Hamlets, often considered the heartland of this vibrant diaspora in the UK. Since its humble beginnings in the early 20th century, evolving from rented spaces to a purpose-built architectural landmark, the Mosque has served as far more than just a place of worship. It has become a central hub for social, cultural, and educational activities, deeply embedding itself in the lives of generations of British Bangladeshis. By providing essential services, fostering a strong sense of identity, and acting as a visible symbol of Muslim presence and resilience, the East London Mosque plays an indispensable role in uniting, supporting, and empowering the British Bangladeshi community in London and beyond.