- On 16 October 2019, I had a letter published in the Financial Times newspaper on charitable status and its importance (“Whatever the entity, legal structure is important”).
- Here it is: FT 16 Oct 2019.
- On 6 November 2018, I alleged that the latest accounts for The Financial Times Limited (registered company number: 00227590), those made up to 31 December 2017, fail to disclose a related-party transaction. The alleged related party is children’s charity Room To Read UK Limited (registered charity number: 1125803). The Financial Times (FT) donates office space to the charity.
- Prior to publication, the FT didn’t respond to requests for comment. However, it deigned to comment the same day once I’d published (see second post on 6 November 2018). As you can see, I published the FT’s statement in full straightaway.
- Which wasn’t difficult because it was merely two sentences. There I also wrote I’d respond shortly. In fact, I did the next day. But, again, the FT didn’t respond to requests for comment. So what did I say in my email of 7 November 2018?
- First, I acknowledged that The Financial Times Limited and Room To Read UK Limited aren’t in fact related parties – at least not by the narrow definition applied by the newspaper. Nevertheless related parties are often more loosely defined than that.
- What is indisputable is that the two entities are linked via John Ridding, the under-pressure chief executive of the FT, who is also a director there. And, as the FT accepts, Mr Ridding is a related party to each.
- Second, I invited the news organisation to comment on incomplete disclosure of transactions. I don’t understand why the firm‘s accounts fail to disclose its donation of office space to the charity, whether they’re related parties or not. Without disclosure of the in-kind donation, the accounts are incomplete. The reader is simply unaware the FT used some of its non-cash resource in this way. Therefore, omission of the donation in the accounts creates a false impression of the firm and its activities.
- My third point was the lack of openness and transparency around the link between the two entities. This is about more than fullness of disclosure of transactions. Mr Ridding is a related party to each entity. Thus the onus is on the FT to show that it takes seriously the need to be open and transparent in its accounts. One way it should do this is by documenting the link between the two entities. By withholding this information in its accounts, the FT risks the perception that it is deliberately hiding the link.
- I finished with a question about advertising in the newspaper. I asked whether the FT has ever granted Room To Read UK Limited free and/or reduced-price advertising in the newspaper. If so, in which year(s)? The charity first came to my attention earlier this year after several full-page ads in the FT (see 4 June 2018 post). No other charity has advertised so extensively in the newspaper in 2018 (to date). Thus there‘s the reasonable suspicion that the FT makes special concession to the linked charity on advertising. If so, this should be reported.
- I read the FT every day. It’s actually my favourite newspaper for reasons far too boring to go into. Though for an organisation that holds others accountable, its non-responsiveness and unaccountability are disappointing. What’s worse, its journalists daily berate companies, rightly, for incomplete disclosure in their accounts. Remember, too, Room To Read UK Limited fails to name in its accounts the FT as the donor of office space – despite my questions about its exact relationship with the newspaper months before it (the charity) filed (see 6 November 2018 post).
- Mr Ridding came under scrutiny for his perceived fat-cat salary upon publication of the FT’s latest accounts at the end of July (see 6 November 2018 post). However, he also deserves scrutiny as a related party to both the FT and Room To Read UK Limited, both of whose accounts omit to disclose the transaction between the linked entities.
- On 22 October 2018, I first requested a comment from the FT on alleged non-disclosure of a related-party transaction in its accounts (see previous post). It didn’t respond. I therefore sent a reminder a week later, but to no avail. Nothing.
- Having published this morning (6 November 2018), I finally received a written statement from the news organisation this afternoon: “The Financial Times Limited is not required to disclose its transactions with Room to Read as they are not related parties. Mr Ridding is related to both organisations but does not have control or joint control over either entity.”
- I shall respond shortly.
- The latest accounts for The Financial Times Limited (registered company number: 00227590), those made up to 31 December 2017, fail to disclose a related-party transaction. The related party is children’s charity Room To Read UK Limited (registered charity number: 1125803). The Financial Times (FT) donates office space to the charity.
- In May, public contact for the charity, Sarah Myers Cornaby, confirmed in an email that Room To Read UK Limited’s office was at the FT (see 4 June 2018 post). But back then Ms Myers Cornaby declined to give further details about the arrangements between the newspaper and the charity in relation to the office, writing: “Our arrangements for 2017 will be reflected as appropriate in our future audited accounts.”
- Well, in September, the charity filed its 2017 accounts at both Companies House and the Charity Commission. However, the latest accounts fail to identify the FT as the donor of office space – there the name of the donor is undisclosed.
- Ms Myers Cornaby didn’t respond to emailed requests that month for confirmation that the FT is indeed the donor.
- The FT‘s 2017 accounts show no related-party transactions (see note 22 in the notes to the financial statements, related-party transactions).
- John Ridding is the link between the news organisation and Room To Read UK Limited.
- Mr Ridding is FT chief executive and a director of the firm. He is also longstanding chair of the charity’s UK advisory board, which “exists to support the promotion and fundraising activity of Room To Read UK Limited in the UK and Europe.” Further, in March, Mr Ridding became Room to Read’s board chair – chair of the global board of directors, that is (see 4 June 2018 post). Room to Read is a multinational charity. The FT chief executive was already a member of the global board of directors.
- Mr Ridding came under scrutiny for his salary upon publication of the FT’s latest accounts at the end of July. These revealed that the FT chief executive received a stonking £2.6m last year, which represented a £510k rise before tax. Days later, in August, Mr Ridding announced that he would return his 2017 pay increase, about £280k after tax, to the company, to be used to promote women’s careers and reduce the gender pay gap at the FT. His move was prompted by outcry from the paper’s National Union of Journalists group over the perceived excessive pay hike. Two months later, FT journalists remained in dispute over the matter, according to the Daily Mail’s city diary, “The dastardly Mr Deedes” (17 October).
- I asked the FT in emails to explain the non-disclosure in note 22 of the donation of office space to related party Room To Read UK Limited. It didn’t respond.
- The Financial Times (FT), of all newspapers, would strongly disapprove of an entity knowingly failing to address problems with its accounts. Yet the UK arm of a multinational charity long-linked to the FT is doing just that. What’s more, the charity was unwilling to answer questions about its links to the newspaper, particularly in relation to the charity’s office, which is at the FT’s headquarters in London.
- I first came across charity Room to Read UK Limited (registered charity number: 1125803) last month after several full-page ads in the FT. These were promoting the charity’s fundraising event in central London’s Hyde Park on 12 June, an “exclusive” 10km race to find “London’s fastest exec”. All very London-centric and corporate, then.
- The charity, whose global headquarters are in San Francisco, USA, promotes both literacy and girls’ education in “developing” countries. Its slogan is “World Change Starts with Educated Children.” (Its capitals.)
- In 2016, income at Room to Read UK Limited was £2.7m, according to the latest accounts, made up to 31 December 2016. There are two problems with the accounts, both relating to salary disclosure, which is inadequate. Further, the auditor seemingly failed to spot the problems.
- I refer to the requirements for charity accounts, Charities SORP (FRS 102), which the accounts state they follow, in particular Module 9, “Disclosure of trustee and staff remuneration, related party and other transactions” (http://charitiessorp.org/media/620787/frs102_module-9.pdf). The first problem is that the accounts fail to make the required salary disclosures specified in para 9.30. While the second one is that the accounts also fail to make the required salary disclosures specified in para 9.32. Paras 9.31-9.32 relate to “key management personnel”.
- Public contact for the charity, Sarah Myers Cornaby, who is “senior development director, Europe and Africa”, acknowledged the two problems in an email. She added that both would be corrected “for our 2017 accounts”.
- Thus there’s no intention to address the problems with the 2016 accounts right now. The charity’s decision not to re-submit its latest accounts in the correct format demonstrates a lack of urgency. But that’s not all.
- The public rightly expects charity accounts to be full and accurate. How can the public trust and have confidence in Room to Read UK Limited, when it’s happy to knowingly ignore the requirements for charity accounts?
- The charity showed similar disdain when I queried its links to the FT. Ms Myers Cornaby said in an email: “The FT is a long-term supporter of Room to Read.” The registered office address for Room to Read UK Limited is the UK home of the FT – and has been since 18 May 2016, according to Companies House records. Ms Myers Cornaby confirmed in the same email that the charity’s office is now actually at that address, too. But she declined to give further details about the arrangements between the newspaper and the charity in relation to the office, writing: “Our arrangements for 2017 will be reflected as appropriate in our future audited accounts.”
- Room to Read UK Limited has been linked to the FT for a long time. FT chief executive John Ridding, for example, is chair of the charity’s advisory board, which “exists to support the promotion and fundraising activity of Room to Read in the UK and, where appropriate, Europe.” The charity accounts for the last five years, available on the Charity Commission website, all show the FT boss in that role. In March this year, meanwhile, Mr Ridding became Room to Read’s board chair – chair of the global board of directors, that is (screen shot in Figure 1). The multinational organisation is evidently keen on boards. And Mr Ridding.
- Indeed, Mr Ridding is billed as one of the “30 top London executives” taking part in the charity’s forthcoming 10km race in Hyde Park (screen shot in Figure 2). There’s no, er, running away from the fact that when it comes to advertising in the FT, and so extensively, or locating the office, it can’t hurt Mr Ridding is chief executive.
- The FT is rightly critical of opaque, unaccountable organisations. What a pity, then, Ms Myers Cornaby was unwilling to answer questions about the links between the newspaper and Room to Read UK Limited, particularly in relation to the charity’s office.
On 22 August 2017, I revealed that regulator the Charity Commission was going to instruct charity The Lee And Bakirgian Family Trust (registered charity number: 1046940) to re-submit its latest accounts “in the correct format”. This was after earlier that month I’d brought to the commission’s attention the problem with the latest accounts, made up to 30 September 2016: they didn’t contain an independent examiner’s report to the charity trustees. Here are the deficient accounts, downloaded from the commission on 27 July 2017: 0001046940_AC_20160930_E_C. Well, the north west charity has duly re-submitted them – but there’s no record on the commission’s public register of charities that the accounts had to be re-submitted. The re-submission is hidden. The fact of re-submission is hidden in the new version of the accounts, too. Both are unsatisfactory. The charity’s records should surely be complete and transparent.
Lord Lee of Trafford (Lib Dem) is a celebrated private investor, who, among many other things, has for a long time written a column in the FT newspaper about investing. How ironic: former MP Lord Lee pores over company accounts and tells FT readers how to interpret them. Yet the latest accounts for his own charity – he’s a trustee – were inadequate, according to the regulator.
On 18 September 2017, the commission told me in an email Lord Lee’s charity had now re-submitted the accounts. Nevertheless at date of publication there’s no indication of the re-submission on the commission’s public register of charities. There the revised accounts, which aren’t identified as such, are erroneously shown as received by the commission on 28 April 2017 – the date when the original accounts were filed there. In other words, the regulator hides the re-submission.
It’d be less of a concern if the revised accounts themselves documented the fact of re-submission and why it was necessary. But they don’t.
So the latest accounts now include an independent examiner’s report to the charity trustees – which, although undated by the examiner, obviously helps to maintain public trust and confidence in Lord Lee’s charity. But neither the commission’s public register of charities nor the accounts themselves record the fact of re-submission and why it was necessary. So much for transparency and accountability.
When I brought to the commission’s attention the new problems, a staff member said in an email: “We are in the process of reviewing and updating the ‘search for a charity’ and register page, I have forwarded your comments to the relevant team for them to incorporate into their feedback for future versions.” I won’t hold my breath.
- Lord Lee of Trafford (Lib Dem) is a celebrated private investor, who, among many other things, has for a long time written a column in the FT newspaper about investing. One of the former MP’s declared non-financial interests is his role as a trustee of charity The Lee And Bakirgian Family Trust (registered charity number: 1046940). Here I reveal a problem with the latest accounts for the north west charity, made up to 30 September 2016.
- Income that year, £30 236, is above the statutory threshold for external scrutiny of the accounts, £25k. Yet there was no external scrutiny of the accounts. That is, there’s no evidence of an independent examination.
- In July 2017, I twice requested a comment from the public contact for the charity, Simon Ellis at accountants Jackson Stephen LLP, Warrington (email). I didn’t receive a response.
- On 18 August 2017, a spokesperson for regulator the Charity Commission told me in a written statement: “The Commission will be contacting the trustees to request they re-submit their accounts in the correct format so that we can be satisfied the accounts we hold are accurate and in line with charity law.”