Formal probes into Coventry City of Culture Trust confirmed

The National Audit Office (NAO) is to examine the finances of Coventry City of Culture Trust, which entered administration last month, with the Charity Commission confirming that it will also be investigating the circumstances surrounding the collapse.

According to the BBC, the NAO inquiry will aim to establish the sources involved in funding the trust – which included Arts Council England and the Department for Culture, Media and Sport – and the extent of their support.

The news follows confirmation the Charity Commission is also conducting an investigation into the charity, which was responsible for running legacy projects following Coventry’s stint as UK City of Culture 2021.

READ MORE:

Last Friday (30 March), the Charity Commission wrote to Labour MP for Coventry North West, Taiwo Owatemi, confirming it has opened a regulatory compliance case and is looking into allegations made about the financial management of the charity.

“Our case will explore decisions taken by the trustees. If we establish any mismanagement of the charity, we will take our own regulatory actions as necessary,” the letter reads.

“I hope this investigation means that there will be proper scrutiny of decisions that were made. We must find out what went wrong and why,” Owatemi said on Twitter.

Trust representatives shun council meeting

News of the inquiries comes after staff and trustees from Coventry City of Culture Trust failed to attend a meeting with Coventry Council about the trust’s finances for a second time last week.

Coventry Council’s Scrutiny Board invited former senior staff and current and former trustees to a meeting held last Wednesday (29 March), but only one of the 21 people invited attended.

It is the second time senior staff at the trust have avoided invitations to speak to the council, following a meeting that lasted just 30 minutes earlier in March.

During last week’s meeting, Scrutiny Board Chair Randhir Auluck said a number of trustees advised they could not attend due to ongoing administration proceedings.

The only invitee present – Chair of the Trustees until May 2022 David Burbidge – voiced support for a formal inquiry into how the charity ended up in administration last month.

The meeting was called to discover how the trust used its public funding, including support provided by the council itself.

According to a briefing note shared on the council’s website, the council was already owed £0.6m by the trust when an additional £1m loan was granted in October 2022.

At the time, the trust told the council it was predicting an overspend of up to £1m for 2021/22 due to a “historic problem which was causing a temporary cashflow challenge”.

The council’s briefing note adds the decision to offer the £1m loan “was a judgement call balancing the potential to rescue a very difficult position for the trust set against the level of risk that part or all of the loan might not be recoverable”.

Back in October, the decision to grant the loan saw staff from two of the trust’s key partners – the University of Warwick and Coventry University – quit the charity’s board.

Figures from the trust’s end of year report shows the charity recorded an overspend in excess of £1.5m in 2021/22, despite receiving the council’s £1m bail-out loan.

Administrators seek legal advice

Coventry City of Culture Trust’s joint administrators also turned down an invitation to attend the Scrutiny Board meeting last week.

In a letter sent to the council ahead of the meeting, the administrators, from ArmstrongWatson, said they were unable to attend as their ongoing investigation is confidential and information included may be subject to legal privilege.

The letter added the administrators are seeking legal advice as to how they “may better engage with the council and other public bodies whilst preserving the confidentiality of [the] investigation”.

The administrators also have a legal duty to keep the Charity Commission updated on developments in their proceedings.

In the letter addressed to Owatemi, the Charity Commission said its own investigation must allow for the administrators to make their findings first, which it will then consider in turn.