Charity hired fraudster as adviser and went bust owing £4m

Published on Monday 1 November 2010 14:15

A LONG-running charity that was wound up last week after more than 100 years is thought to have accumulated debts of up to £4 million, The Scotsman can reveal.

Three of Edinburgh's best-known Fringe venues - the Roxy, the Forest and the GRV - are all being put up for sale in the wake of the demise of Edinburgh University Settlement (EUS).

It has emerged former Hibernian FC chairman David Duff, who was jailed for two years for fraud in the mid-1990s, had been acting as an adviser to the charity, which collapsed last week, with the loss of 40 jobs.

Scotland's charity regulator is thought to have been investigating the affairs of the social outreach charity, which ran a number of centres and programmes for disadvantaged groups, for months.

EUS, which has not had any links to the university for some time, hired Mr Duff, who had an ill-fated three-year spell as Hibs chairman in the 1980s, as a "business development consultant", according to its website. He was jailed for two years in 1993 for his part in a massive mortgage fraud.

Staff were told last Thursday afternoon that they were being made redundant and would not be paid for the month they had just worked after the charity was sequestrated at Edinburgh Sheriff Court. It emerged EUS was spending about 300,000 more annually than it was earning in recent years.

All its centres have been closed, along with the Roxy, in Roxburgh Place. The Forest, in Forrest Road, and GRV, in Guthrie Street, had lease arrangements with the charity.

• Help for the poor

PricewaterhouseCoopers, the firm handling EUS's affairs, said all of its property assets, which also included the Community Learning Centre in Regent Road and the Stepping Stones Centre in Norton Road, would be going on the market.

Bruce Cartwright, a partner at the firm's Edinburgh office, said: "The charity's income has fallen way short of what it was spending in recent years. It's not clear why this has been happening, but it's meant that a substantial debt has built up. We will putting all the charity's assets up for sale, but we're only prepared to sell them at the market value."

One source close to EUS said: "It had properties that were let on completely uncommercial rates. While it's common for charitable organisations not to make a profit on lettings, you still need to meet your mortgage payments. There appears to have been a lack of basic commercial controls."

An insider said: "The charity has been in serious trouble for several months due to cashflow problems and demands from the bank to generate more income.An official complaint was made to the Office of the Scottish Charity Regulator (OSCR] in July about the way EUS was being run and, in particular, the involvement of David Duff."

Neither Mr Duff nor Nick Flavin, the charity's director, could not be contacted for comment.

A OSCR spokesman said it would not comment on whether an individual charity was the subject of an ongoing inquiry.