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A charity set up by Brexit backer, Arron Banks, has been strongly criticised by the Charity Commission.

The regulator found a “serious flaw” in how the Love Saves the Day Foundation was managed and administered, with trustees including Banks and Leave.EU chief executive, Liz Bilney, failing to properly account for all charitable funds.

Banks, who claims to have spent more than £8 million on the campaign to leave the European Union, emerged as one of the most significant figures behind Brexit. He co-founded Leave.EU and was a major donor to Nigel Farage’s Ukip.

Love Saves the Day was set up in 2015. The charity’s website reported charitable work worth hundreds of thousands of pounds taking place around the world, including in Lesotho and Belize.

But a Charity Commission investigation – opened after media reports of Banks’s Brexit spending – found that that the charity’s trustees “were not properly accounting for all charitable funds”. The charity’s published accounts showed no income or expenditure.

The regulator also told trustees that the charity’s website “must be taken offline as a matter of urgency” as it “risked misleading the public due to the charity’s inactivity.” Love Saves the Day has since been wound up and its website closed down.

“The public rightly expect high standards of governance, transparency and accountability of charities. The trustees of Love Saves the Day fell short of these expectations with their inadequate management and administration of the charity,” said David Holdsworth, deputy chief executive of the Charity Commission.

Labour MP Ben Bradshaw said: “Once again, Mr Banks, the main funder of the campaign for Brexit, has been found to have made misleading statements about his affairs. This is why it is so important we have a full investigation into how the campaign for Brexit was funded and the sources of that money, so that the public can have confidence in the legality of the campaign and the legitimacy of the result.”

The Brexit peddled by Banks and his cronies was an entirely self-interested one which didn't spend much time worrying about the common good. Martin Doherty-Hughes MP, Scottish National Party

SNP MP Martin Doherty-Hughes said: “As is now abundantly clear, the Brexit peddled by Banks and his cronies was an entirely self-interested one which didn’t spend much time worrying about the common good.”

Arron Banks rejected the Charity Commission’s findings, saying that Love Saves the Day “closed due to difficulties with the supporting law firm acting as a trustee”, adding “I bet Holdsworth voted Remain!”

Banks is the biggest political donor on record in Britain. After an investigation by openDemocracy last year found serious questions about the extent of Banks’s wealth, the Electoral Commission launched a fresh investigation into Banks’s Brexit campaigning.

In May, the electoral regulator fined Leave.EU £70,000 for breaching electoral law and referred chief executive Liz Bilney to the Metropolitan Police. Bilney was also a trustee of Love Saves the Day.

In June 2015, Love Saves the Day told the Charity Commission that it had received requests from interested donors, according to correspondence released to The Ferret under freedom of information legislation last year. The charity also told the regulator that trustees would receive monthly financial reports.

At the time, the trustees said that the charity was due to receive a £10,000 donation. The Charity Commission found this £10,000 was never received by Love Saves The Day. Instead, the trustees had instructed the donor to transfer the funds directly to another charity.

“If a trustee provides funding to a charity, then it must be declared as income in the charity’s accounts, along with any related expenditure. By not doing so, the trustees were not properly accounting for all charitable funds,” the Charity Commission report said.

Outside of the UK, Love Saves the Day reported working in two countries close to Banks’s business interests: Belize and Lesotho. Among the charity’s trustees was former Leave.EU communications director, Andy Wigmore.

A naturalised Belizian, Wigmore represented his adopted country in shooting at the 2016 Olympic Games. He was Belize’s diplomatic envoy to the UK before losing that job last year.

Another trustee, James Pryor, worked in Lesotho on numerous projects. Ahead of the 2015 general election in Lesotho Pryor worked for another Banks connected company, Chartwell Political advising the Basotho National Party. Wigmore and Pryor posted photos on social media of themselves in the country “burning the midnight election oil.”

An investigation into Banks’s work in Lesotho found that rather than the Basotho National Party paying Chartwell for its advice, Chartwell was donating money to the Basotho National Party. The investigation also called into question the size of reported diamond finds at a Lesotho mine controlled by Banks.

To suggest that the other trustees of Love Saves the Day fell short of expectations with inadequate management and administration is utter rubbish. Arron Banks

Among projects Banks has supported is the Federation of Lesotho Women Entrepreneurs. The donation was made after the Federation president Mamahlapane Magdalene Rakuoane was introduced to Banks in London, by then Lesotho High Commissioner in the UK, Felleng Makeka.

After she returned home, Banks gave the project around £88,000. According to documents in the public domain, this donation was not made through Love Saves the Day.

A press statement from Arron Banks said that he had donated over £1 million to charities: “How I choose to make donations to charity is my business and my business only. In the case of Love Saves the Day, it was set up in support the many charities I choose to donate to year on year.

“It was closed due to difficulties with the supporting law firm acting as a trustee.

“Apart from this individual, to suggest, as David Holdsworth has done, that the other trustees of Love Saves the Day fell short of expectations with inadequate management and administration is utter rubbish. The charity did not raise any money from the public or receive any donations while it was being set up.”

Banks criticised the Charity Commission report for being politically motivated. “In the current climate of attacks by the establishment organisations on anyone who has supported Brexit, it’s hardly surprising,” he said. “I bet Holdsworth voted Remain!”

This story is also being published by openDemocracy.