The purchase of new properties for Calpe House was in the interests of the charity and was properly handled by its trustees, the UK Charity Commission has found after investigating the deal.
The Commission probed the purchase of buildings in Norfolk Square after receiving a dossier of information relating to the sale from an anonymous person going by the name ‘leviticus 1931’.
The Commission inquired into the allegations in the dossier and requested further information from the trustees of the Calpe House Charitable Trust.
“The Commission opened a case into the Calpe House Charitable Trust after concerns were raised regarding a property purchase by the charity,” a spokesperson for the UK Charity Commission told the Chronicle.
“From the information provided, we are satisfied at this time that the trustees have acted with reasonable care and that the purchase of the property at Norfolk Square was in the interests of the charity.”
The spokesperson added that “this is not a formal inquiry” and the Chronicle understands the Commission will take no further action in relation to the purchase.
The Commission has nonetheless sought clarification on a number of points, including what steps the charity has taken to ensure its sensitive documents are stored securely. It has also pressed the charity to file accounts promptly.
In a separate development, the Gibraltar Government confirmed that it had no concerns about the purchase of the buildings or recent changes in the charity’s structure.
“The Government has no concerns about the acquisition of the Norfolk Square property and the project to refurbish it into a new Calpe House facility for Gibraltar sponsored patients,” Chief Minister Fabian Picardo told the Chronicle.
“We have been appraised of all aspects of the acquisition and the proposed refurbishment at every stage.”
Mr Picardo said the Government was “totally satisfied” that the buildings offered “excellent value for money”, adding that a larger home for Calpe House had been sought since 2011.
As to the changes in Calpe House’s structure, these had been done with the support of the Government “and for good reasons”, he said.
The purchase of the new buildings has proved controversial after the Chronicle revealed last September that asbestos had unexpectedly been discovered in the buildings, requiring remedial work that would push back completion times and increase costs.
The presence of asbestos had not been picked up by initial surveys and was not publicly announced by the charity, prompting questions as to why a more thorough review of the building had not been conducted prior to purchase.
The asbestos issue has now been resolved at a cost of £165,000, according to the Gibraltar Government.
But since the issue was revealed, Calpe House has faced intense scrutiny over its purchase of the Norfolk Square buildings and its handling of the project.
The three buildings were purchased at a cost of £8.5m using a loan from the Gibraltar Government, which will own a 51% stake in the properties.
The government has no role in the running of the charity, however, and Calpe House will own the balance, the same arrangement as with the charity’s existing property.
The buildings were purchased in a dilapidated state and a further £4.8m will be spent on refurbishing them, much of it raised or donated by individuals and organisations in Gibraltar.
A central question that has been repeatedly asked of Calpe House is how the buildings were selected and why they were deemed to be the most appropriate for the charity’s needs.
Calpe House Charitable Trust was first established in 1991 to provide support and accommodation for Gibraltarians receiving medical treatment in the UK.
Since 1994, it has operated from a building in Prince’s Square which was purchased for £600,000.
But demand for beds has outstripped capacity and the charity has been exploring a move to a bigger site for over six years.
Albert Poggio, the charity’s chairman, told the Chronicle that several sites had been considered once the trustees agreed that the Prince’s Square property could no longer accommodate the needs of Gibraltarian patients.
By 2014, the buildings at Norfolk Square had been earmarked as a potential purchase. They were among a number of properties identified by an agent Mr Poggio had met socially.
The buildings “…fitted the criteria very well,” Mr Poggio said.
They were close to St Mary’s hospital, which at the time was one of the main centres where Gibraltarians were sent for treatment. They were also close to public transport links.
Having secured government approval for the purchase, the charity engaged professional advisors and began the process of negotiations, valuations, surveys and due diligence.
“There was no step taken without the full consultation of the government,” Mr Poggio said.
The Norfolk Square buildings did not come without a hitch, however.
During the negotiations prior to purchase, it became apparent that the buildings were not a freehold but rather came with ‘nomination rights’ giving three NHS trusts the right to house staff there.
After months of negotiations, however, the seller- a long-established UK housing association called Catalyst Housing Group – agreed to secure the release of the nomination rights and pay £2.2m from the proceeds of sale as compensation to the trusts.
That meant Calpe House purchased the properties for the agreed price of £8.5m without any additional costs relating to the nomination rights.
The trustees of the charity insist that the purchase must also be seen as a long-term investment in an attractive real estate market.
“We’re not developers, we’re not in the property business, we’re not in there to make a profit,” Mr Poggio said.
“But you have to look at the long-term value of those buildings.”
He cited the example of Prince’s Square, the current home of Calpe House which was purchased in the early 1990s for £600,000 but which is expected to fetch up to £8m once it is sold.
Pressed on the issue of whether such expensive, dilapidated buildings were the most appropriate to Calpe House’s needs, the trustees insisted they were a good purchase for the charity.
“Could we have been more exhaustive, could we have gone through 100 buildings?” said Calpe House trustee George Desoisa.
“But when we, humbly, in our limited experience, identified this building, looked at it, went through it, thought it ticked every single box, got the OK from the powers that be and managed to overcome the huge hurdle of the nomination rights at a huge saving to Gibraltar, the community and the Trust, we went for it.”
The trustees stressed that at all stages in the process, they had been properly advised by property professionals and lawyers, and had consulted the Gibraltar Government throughout.
Adding to the controversy surrounding the purchase of the building was a change in the charity’s structure which was not announced publicly and only came to light when revealed by Panorama earlier this year.
The charity had operated since 1991 as the Calpe House Charitable Trust, its affairs managed by trustees who give their time voluntarily.
But the changing demands on the charity meant its legal advisors suggested moving its assets to Calpe House Limited, a company limited by guarantee and structure commonly used by charities in the UK.
Calpe House Limited is registered with the UK Charity Commission and its directors – the Calpe House trustees – are bound by the same regulations governing UK charities, and by the terms of the original deeds that set up the trust in 1991.
“The charity remains the same, it merely operates in a different legal form,” Calpe House said in a recent statement.
The company, which will own the charity’s property assets, has yet to file accounts and has, in fact, been pressed by the UK Charity Commission to do so as a matter of urgency.
Delays in filing accounts have proved controversial in the past.
But the trustees insist they arose because Grant Thornton, the accountants who worked on a bro bono basis for the charity, had been inundated with work relating to high-profile liquidations in Gibraltar.
Calpe House, while thanking Grant Thornton for its support over the years, has now appointed UK-based accounts Cooper Young to handle its filings. The company’s accounts were due to be filed this week.
The monies raised by the community as part of the Norfolk Square appeal are held in Gibraltar by the Friends of Calpe House, a Gibraltar-registered charity whose sole aim is to raise funds for Calpe House.
This includes £600,000 in debentures, as well as funds held in savings and current accounts.
‘BACK ON TRACK’
Speaking to the Chronicle, the trustees accepted that they should have been more proactive in communicating details of their decisions and the changes undertaken over recent years.
But while they acknowledge that demands for scrutiny are legitimate given the public funds involved, they are frustrated that their voluntary work is being tarnished and that this may be having a knock-on impact on the appeal.
In the coming weeks, they are determined to lay to rest any doubts and ensure the community continues to rally round Calpe House as it has always done.
“We are all very demoralised,” Mr Poggio said.
“We had a very successful appeal which raised over a million pounds including commitments and we need to get back to that.”
Last night, Chief Minister Fabian Picardo said the Gibraltar Government was satisfied with the way in which the charity had gone about the purchase of the new buildings at Norfolk Square and handled the refurbishment project.
Responding to Chronicle questions, the Chief Minister said the government had also been fully consulted on the change in structure at the charity and was “entirely content” with the move to a limited company.
He added that the delay in filing accounts, while not desirable, was not abnormal and did not appear to have been for any “nefarious” reason.
“There is no reason to have any doubts about the continued importance of Calpe House to Gibraltarians in London as sponsored patients,” Mr Picardo said.
“There is no reason to doubt that monies charitably donated to Calpe House are applied to any purpose beyond the provision of the new, enhanced facility.”
“I personally continue to fully support Calpe House and to give to Calpe House from my monthly salary. I urge all my fellow Gibraltarians to do likewise.”
“I assure the public that if at any stage the Government had any doubts about the charity, we would have acted already, without the need for anyone to urge us to do so.”
“There is no cause for concern and administrative irregularities should not vitiate the substantive value of this great project.”