East London Mosque Charity Faces Watchdog Scrutiny After £1 Million Loss in Investment Deal

A leading Muslim charity that funds one of the UK's most prominent mosques is under formal scrutiny after losing £1 million in a failed investment tied to an NHS supplier.

The Charity Commission, the independent regulator for charities in England and Wales, has issued a formal warning to the East London Mosque Trust (ELMT), citing failures to adequately oversee the charity's financial dealings. The watchdog has given the Trust six months to take corrective action or face further regulatory consequences.

Regulator Issues Formal Warning

Joshua Farbridge, Head of Compliance Visits and Inspections at the Charity Commission, stated:

'The East London Mosque Trust has been advised on more than one occasion about having appropriate oversight of funds, and so we have now issued a formal warning.'

According to the Commission, the trustees lacked sufficient oversight over a high-value investment that ultimately resulted in the complete loss of the charity's funds.

An independent governance review has been ordered by the charity, with findings to be submitted to the Commission. The ELMT is also expected to pursue all reasonable means to recover the funds.

'When people donate to a charity, they put their faith in those running it to manage those funds with care and in line with its aims,' the Commission said. 'In this case, we found the trustees lacked the oversight we'd expect of such a large investment, nor did they ensure thorough due diligence had been undertaken.'

£1 Million Lost in NHS Supplier Deal

The £1 million loss stems from an investment made in a company approved to supply NHS equipment. The charity had expected to receive a 20% commission within six months. However, the company went into administration, and the funds were lost.

The Commission stated it had previously warned ELMT to strengthen its financial controls before the charity reported the investment loss in February 2023. Upon reviewing the trustees' internal report, regulators concluded that proper due diligence had not been conducted.

A statement issued by the Commission on 30 May said:

'The trustees' failure to act with reasonable care and skill, which contributed to the loss of the charity's funds, is misconduct and/or mismanagement.'

The warning letter issued by the Commission mandates that ELMT implement new financial controls and enhance board oversight to ensure future investments are appropriately managed.

A Century-Old Charity Serving a Vast Community

The East London Mosque, located in Tower Hamlets between Whitechapel and East Gate, is one of the largest and oldest Muslim places of worship in Western Europe. The mosque complex also includes the London Muslim Centre and the Maryam Centre.

The charity's origins date back to 1910 under the name London Mosque Fund. Today, ELMT funds a wide array of religious, educational, and community services for the local Muslim population and wider public.

Its stated charitable objectives include:

• Advancing the Islamic faith for public benefit through the management of a mosque and community centre.
• Supporting education and providing facilities for recreation and leisure in the interest of social welfare.
• Promoting other charitable purposes as determined over time.

What Happens Next?

The Charity Commission will monitor the Trust's progress over the next six months. If the ELMT fails to implement the required reforms or take action to recover the lost funds, it could face additional regulatory sanctions.

For now, the spotlight remains firmly on the Trust's leadership and whether it can regain the confidence of donors, regulators, and the community it serves.