Charity regulator criticises 'misconduct' over Rangers v AC Milan game Published duration 6 August 2013

image caption The charity game between Rangers Legends and AC Milan Glorie was played at Ibrox last year

The charities watchdog has strongly criticised trustees of the Rangers Charity Foundation after cash raised at a match went to the football club.

The fundraising game between Rangers Legends and AC Milan Glorie took place after the club entered administration.

After doubts the game would go ahead, trustees gave the club control of match income - a decision which cut the charity's profit share by £191,430.

The watchdog said the decision making of trustees "constituted misconduct".

However, the Scottish Charity Regulator decided not to take action against any of the trustees.

The regulator's report states that the Rangers Charity Foundation had three trustees at the time of the game - all of whom were employed by or held senior positions at the club.

A fundraising dinner and the football match between Rangers Legends and AC Milan Glorie had already been scheduled for 29 and 30 March 2012 when the club entered administration on 14 February.

Income control

One of the trustees alerted the administrators, from Duff and Phelps, of the club's commitment to provide support for the event.

The report states that the trustee believed there was a risk that the administrators would not allow the game to go ahead if it was not in the interests of creditors.

The trustee agreed to assign control of the income from the charity match to the administrators to ensure that the club could recover costs.

Before this decision, the Rangers Charity Foundation had been due to receive 60% of the net profit from the game plus a management fee of £25,000.

As a result of the trustee assigning income control to the administrators, the charity only received 10% of the net profit - £38,286 - plus the management fee.

This meant that £191,430 of profit that would have gone to the charity under the old arrangements, went to the administrators who were running club.

In its ruling, the charity regulator noted: "Although the decision was a breach of legal duties, it was made in good faith and in the interests of the charity given the risk that otherwise the fundraising event might not have taken place."

The regulator said: "The charity's decision-making process, which allowed important decisions to be made by one trustee acting alone, was in breach of trustees' duties and constituted misconduct on the part of the charity trustees as a whole."

The regulator said that since the charity was set up, there had been "an inherent conflict of interest" because of the trustees' connection to the club.

It also states: "In addition, the conflict of interest presented by the assignation was not managed appropriately and professional advice was not obtained as required by the charity's trust deed."

Losses avoided

The regulator added: "Having looked carefully at the whole situation, [the regulator] has not found that the ongoing risks to charitable assets or to the reputation of the sector justify [the regulator] taking action against any of the trustees."

The regulator's report noted that one of the three trustees "did not respond to any of our requests for information".

In a statement, the trustees of the Rangers Charity Foundation said they were "pleased" that the regulator had "concluded that the decision to assign the rights of the fundraising event to the club was done 'in good faith and in the interests of the charity'".

The trustees said that the foundation had received £63,288 from both fundraising events in March last year and that if these had been cancelled, it would have "lost over £12,000 in pre-paid deposits".

The statement continued: "Extensive legal advice has been sought by the foundation during the last year in order to enable new trustees to be appointed and new aspects of governance to be established.

"These actions, which are now concluded, were an inevitable consequence of the situation faced by the foundation following the changed circumstances of the club."

The statement concluded: "Supporters of the foundation can be reassured that the Rangers Charity Foundation was and continues to be a force for good, sustained in large part by the loyal support of the Rangers Family.

"The generosity and charitable spirit of Rangers fans is second to none and the foundation looks forward to further expanding its activities going forward - in Glasgow, across Scotland and throughout the world."

Rangers chief executive Craig Mather said: "This match took place during an unprecedented time for Rangers Football Club and we are delighted that charity regulator concluded that the decision to assign proceeds to both the club and the charity foundation was done 'in good faith and in the interests of the charity'.