Cylch, the Wales Community Recycling Network, is under ‘internal audit investigation’ by the Welsh Government over ‘concerns’ made to the Charity Commission (the regulator of English and Welsh charities) regarding the loss of charity funds and conflicts of interest.

The investigation is looking into 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.

Background

Cylch provides ‘information, advice and support to existing and emerging community reuse, recycling, composting and reprocessing organisations across Wales’ and counts more than 50 recycling and reuse charities in Wales in its membership.

The charity is largely funded by the Welsh Government, (£300,000 was assigned to the network for 2012/13) and due to ‘financial losses’, an internal audit into the organisation’s finances is now underway.

The Charity Commission, which registers and regulates charities in England and Wales, has confirmed that it is in discussions with Cylch over the concerns and whether conflicts of interest ‘were properly managed’.

In a statement, the Charity Commission said: ‘With regards to Cylch, we have received concerns about the charity. These concerns are linked to the loss of charity funds and whether conflicts of interest were properly managed when making decisions for the charity. We have examined the accounts and are in contact with the charity to discuss these matters. We are also in contact with the Welsh Government, as the charity’s main funder.’

The Welsh Government has also confirmed that it is undertaking an internal audit investigation adding that it would be ‘inappropriate’ for them to comment further at this time.

‘Politically-motivated resentment’

Speaking to Resource, Mal Williams, said that the complaints had derived from 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.”

Williams also rebuffed reports that his resignation was related to the investigation.

“The first phase of Cylch is coming to an end and we need to focus on the reuse agenda, which is predominantly what most of our members do. So I charged Richard Thomas with the role of acting CEO to develop the reuse strategy and get used to the responsibility of planning and delivering plans for the future.

“Though I left my position as CEO on the 31 December, I remain as a Director so I still hold to my responsibilities.”

The investigation is expected to conclude by the end of the month and report is due by early February.