Cylch, the Wales Community Recycling Network, has announced that it is to make all its staff redundant in light of an investigation by the Charity Commission.

The charity, which provides ‘information, advice and support to existing and emerging community recyclers across Wales’ and is partly funded by the Welsh Government, announced ‘with deep regret’ that from September 2013, its seven employees would be made redundant.

In a statement on its website, the Cylch trustees stated: ‘It is with deep regret that the trustees of Cylch announce the redundancy of all staff. Since Cylch was formed more than 15 years ago, it has been served loyally by many staff and volunteers. The trustees wish to thank all those who have worked for Cylch in the past and in particular to pass on our gratitude and best wishes to the members of staff who will finish in September.

‘Cylch has contributed to a paradigm shift in resource management and the promotion of sustainable development under the inspirational and uncompromising leadership of Mal Williams. His fellow trustees pay tribute to Mal and express their regret and sorrow that events have led to the decisions in this statement.’

Charity Commission investigation

The Charity Commission has said that even if the charity 'winds up' operations, the inquiry will still continue.

In a written statement, the commission said: ‘The Charity Commission opened a statutory inquiry into Cylch on 17 July 2013, due to concerns around serious failings in the governance of the charity, conflicts of interest and substantial loss of charitable funds resulting from loans and investments. In accordance with our published procedure we aim to publish a report on the conclusion of the investigation’. It added that it was 'not possible to estimate' how long the inquiry will run for.

In light of this investigation, Cylch’s trustees announced that they would not seek further funding from the Welsh Government, with the result that the charity’s entire staff would be made redundant from the cessation of funding in September 2013.

Furthermore, the trustees will oversee the discharge of Cylch's outstanding obligations to the Welsh Government, primarily the management of Cylch investments and its commitments to funding the FareShare Cymru programme.

An internal inquiry into the issues raised by the Welsh Government and Charity Commission has also been launched by the trustees.

Cylch added: ‘It is very important that Cylch members, our sponsors and the wider public understand that the investigations into Cylch do not include any matters that are criminal in nature, any misappropriation of funds or inappropriate personal gain from Cylch's activities or any of the companies or projects associated with Cylch.’

Cylch investigations

The Charity Commission investigation follows a Welsh Government internal audit into the charity prompted by allegations of loss of charity funds and conflicts of interest. The government audit looked at the application of funds relating to Plastics Sorting Limited, a plastic bottle recycling plant that was funded by Cylch's development arm, Cleanstream Group, through Welsh Government money. The plant went into administration in February 2012, and has since been bought by Viridis Recycling.

Speaking to Resource in January, former Cylch CEO Mal Willams said the investigation was brought about following a misunderstanding of Cylch’s ‘complex’ investment structures.

“There are three contributing factors to the investigation: firstly, the fact that Cylch was involved in investing monies in Plastics Sorting Ltd to the tune of many millions of pounds of Welsh Government money; secondly, the fact that those investments failed due to the economic conditions; and thirdly that I was Director of Plastics Sorting whilst CEO of Cylch.

“It’s some pretty nasty politically-motivated resentment from people who saw a complex investment situation that they thought warranted investigation, saw that I was involved in lots of companies and thought that they could fairly easily throw dirt and make it look like it stuck. But no one has been able to present any evidence.”

Williams went on to say that Cylch have been fully co-operating with the Charity Commission and Welsh Government. “We’ve given them a weighty file which contains every piece of paper we could lay our hands on giving evidence to what they were asking questions about. There’s nothing for them to find, there’s no dodgy dealings here. The sooner we get a verdict, the sooner we can all move on.”

The details of the Welsh Government audit have not been publically released, but a spokesperson for the government said: "We are aware of today's announcement by Cylch and that the Charity Commission has opened a Section 46 inquiry into Cylch. It would not be appropriate for us to comment further on these developments until the Charity Commission's inquiry has concluded."

Read more about Cylch and Resource’s previous interview with Mal Williams