The boss of a leading charity has been given a seven-year director disqualification for causing it to collapse by entering into financial contracts that set unachievable targets. The charity provided drug and alcohol rehabilitation services to over 80,000 people across England and Scotland, including a number of prisoners. Between August 2015 and January 2016, the director entered into three different contracts where payment is only made for services if certain pre-agreed targets are met. However, the The CEO signed these contracts without undertaking the necessary due diligence and failed to realise that the targets set were unachievable. This resulted in the non-payment of more than £1.4m – the shortfall that caused the charity to close.
This case highlights the damage an irresponsible director can do even to long standing charities and businesses that have served their communities well for decades.