Crisis hits charity

One of Britain's leading children's charities is in crisis after organisers admitted misappropriating thousands of pounds. The Child of Achievement Awards - which has close links to former Prime Minister John Major - has cancelled its annual awards ceremony, suspended its other activities and dispensed with all its staff.

The moves come after a damning three-year investigation by the Charity Commission, which found the trustees - all members of the same family - had voted substantial "unauthorised benefits" and payments to themselves.

The commissioners also found that the trustees had exaggerated the number of children nominated for awards and were guilty of breaking charity law.

The former chairman of the trustees and the charity's founder, Julie Fisher, has resigned, and is now under pressure to return the MBE she was awarded in last year's New Year's honours list. The two other trustees - Ms Fisher's partner, Karl Phillips, and her mother, Doris - have also quit.

A new chairman, Steve Powell, has been appointed by the Charity Commission, but Ms Fisher insisted last night she was guilty of "disorganisation", not dishonesty.

Child of Achievement, a favourite charity of Princess Diana, each year honours up to 150 children who have overcome severe adversity or disability.

The most recent awards ceremony, in February 2002, was nationally televised, with awards presented at the Hilton Hotel in Park Lane by JK Rowling, Mr Major and TV presenters Gaby Roslin and John Leslie.

But unknown to the award winners, and most of the celebrities present, Charity Commission investigators had by then already begun to probe serious irregularities in the annual accounts. The investigation has now found that Ms Fisher and her mother, as trustees, voted to pay £5,000 a month from charity funds to a public relations company, Alternative PR, run by themselves. More than £103,000 was paid to Alternative PR and £21,000 to another company, Alternative Communications, also run by Julie and Doris Fisher.

Although the trust deeds allowed the charity to pay for PR advice, the amounts paid leapt more than tenfold in a year, the trustees had " conflicts of interest" in making them and the payments to Alternative Communications were unauthorised. There was "no evidence of any formal monitoring" of what Alternative PR did for the charity.

The trustees also voted themselves £12,000-worth of private healthcare from charity funds, despite being warned in writing by their accountant that it was an "unauthorised benefit" under charity law. Ms Fisher says she did not receive the accountant's letter. Ms Fisher paid herself a further £6,400, again unauthorised, and overclaimed expenses, the investigators found. Mr Phillips, who is a solicitor, was paid by the trustees for giving them legal advice, although he was a trustee himself.

Ms Fisher's mother took a salary from the PR company for its work for the charity, which has also been ruled illegal. Charity law bans trustees from benefiting from their position of trust.

"The behaviour of the trustees gave us serious grounds for concern," said Mr Powell. "No charity or organisation that I know of would even dream of doing it like that." Not all the Alternative PR money can be reclaimed but about £60,000 is being sought.

Charity Commission investigators also found that in press releases and statements Ms Fisher had "made exaggerated claims" about the number of children nominated for awards. It is not clear how many nominations were actually received but Mr Powell said it was "very much lower" than the 10,000 claimed by Ms Fisher.

Child of Achievement, which raised more than £500,000 a year from sponsorship and foreign coin collections on aircraft, now has only about £100,000 in the bank and can no longer afford to continue. However, the new trustees, led by Mr Powell and a new chief executive, are trying to rebuild the charity and hope to relaunch it. Mr Powell said that Mr Major, who is Child of Achievement's patron and takes an active part in its work, had been "shocked" to learn of the abuses and offered to step down, but had been urged to stay on. A spokeswoman stressed he had not been involved in the day-to-day management of the charity.

Ms Fisher, from Weybridge, said that she accepted the findings of the Charity Commission investigation and had repaid thousands of pounds to the charity. "The buck stops here," she said. She stressed that she had built the charity from scratch, and had given thousands of hours unpaid to make it successful.

Parents of some of the award recipients were unforgiving. Graham Downs, father of a nine-yearold boy suffering from muscular dystrophy who is expected to die before his 20th birthday, called for Ms Fisher to be stripped of her MBE.