Newmark referred to police
THE POLICE are now investigating fraud allegations against Jeremy Newmark, the former CEO of the Jewish Leadership Council, after the publication of an independent review into his conduct and its handling by the JLC’s trustees.
The report suggests that £111,734 cannot be accounted for and that an additional £266,189 merits further investigation. But, because of the lack of proper accounting records, the panel that published the report say they are not in a position to provide an accurate figure as to the full amount.
The panel say that their work was “seriously hampered” by the absence of key documents and records. They report witnesses saying that “one week after his resignation JN [Mr Newmark] came into the office and ‘removed files, information etc’. JN denies removing any material.”
Last February, the JC revealed the existence of an internal JLC audit from 2013 which reported that Mr Newmark had deceived the organisation out of tens of thousands of pounds.
We also reported how, in order to avoid a scandal, the JLC’s trustees decided to keep Mr Newmark’s behaviour secret and not inform the police.
Although the independent panel does not impugn the motives of the JLC trustees, it criticises their failure to exercise basic oversight and their decision to cover up the scandal rather than fully investigate and report it.
They say there was “little evidence of acceptable levels of financial control” and that Mr Newmark “had the facility to withdraw round cash sums from the bank and make payments into his personal bank account without supporting documentation.”
Following the JC’s story, Mr Newmark resigned as chair of the Jewish Labour Movement — although he remains leader of the Labour group on Hertsmere Council. In the 2017 election, he was the Labour candidate in Finchley and Golders Green and lost by only 1,657 votes.
AN INDEPENDENT inquiry set up to look into allegations that the Jewish Leadership Council’s former CEO, Jeremy Newmark, deceived the organisation out of tens of thousands of pounds has reported that its trustees failed to exert “proper control” over his spending, leading to losses that could not be quantified because of a lack of proper records.
The inquiry was established last February after the JC revealed the existence of an internal JLC audit from 2013 which accused Mr Newmark of unauthorised spending and misleading charities about the cost of projects he worked on.
Mr Newmark, who joined the JLC in 2006, resigned on grounds of ill-health in September 2013 shortly after being confronted with the allegations.
The inquiry report finds that the charity incurred £111,734 of “potentially questionable expenditure”, including over £108,000 in the 15-month period from July 2012 until his departure.
Forensic investigators who assisted the inquiry also identified a further £266,189 in consultancy and other fees which could “merit further enquiry”, though in 2013 trustees said they were satisfied about these payments.
The JLC showed “little evidence of acceptable levels of financial control”, allowing Mr Newmark to spend funds “without approval” and to pay money into his personal bank account “without anyone requesting written support documentation”.
Examples included cash withdrawals amounting to £4,810 and a total £1,900 that was paid into his personal account.
When asked by the inquiry to explain such payments, Mr Newmark said they were reimbursements, since at times he had to “fund the JLC out of his private resources due to a shortage of funds” in the organisation’s bank account. However Sir Mick Davis, the charity’s then chairman, “vigorously denied” the suggestion that Mr Newmark had privately funded the council.
Credit card claims of £17,000 by Mr Newmark warranted further followup, while he had leased a car with his personal number plate without trustee approval, claiming it was a “pool car”.
The month after his departure, when Sir Mick asked him about newly discovered expenses on an account belonging to the (anti-boycott) Fair Play Campaign Group, Mr Newmark agreed to reimburse the charity for “the unsubstantiated sum” of £9,672.19.
But when that money was repaid, it was recorded in the JLC’s accounts as an “anonymous donation” and the JLC’s auditors H W Fisher said they had been unaware until recently of the nature of the payment.
The report says that neither the then treasurer Nigel Layton nor the trustees — who included two chartered accountants — had “exercised proper control” of Mr Newmark’s use of the charity’s funds.
Mr Layton, described as an expert in forensic accounting, had authorised payments without proper checks on a JLC credit card and Mr Newmark’s Amex account, and he did not act on concerns over lack of controls highlighted by auditors in letters in 2010 and 2012.
“Had Nigel Layton carried out his duties as treasurer with more diligence than he appears to have done and paid heed to the weaknesses identified by H W Fisher… it seems to the [inquiry] panel that he would have recommended a much clearer and more effective oversight of Jeremy Newmark’s activities by the trustee body,” it says.
The report said auditors should have been alerted by the weaknesses they identified in 2010 and 2012 to a “potential lack of control” over the procedure for approving expenses. “However, they maintained that the allegations
The JLC showed ‘little evidence of acceptable levels of financial control’
against Jeremy Newmark were of poor administration and therefore thought it inappropriate to follow up with further audit work.”
When Mr Layton was made aware early in September 2013 of allegations by a whistleblower about Mr Newmark’s expenditure, the report says he dismissed the concerns, putting them down to a “naïve employee”.
But he changed his mind after reading an internal report into the allegations.
Although Mr Newmark left at the end of the month, he was given a three-month consultancy by the JLC, and a further three months paid for by
Sir Mick.
The week before his departure as chief executive, when he had been suspended, he came into the
JLC office. According to the whistleblower, he removed files and information — although Mr Newmark has denied this.
The inquiry stated that “records do indeed appear to have gone missing but we have no reliable evidence of how that occurred”.
But the inquiry panel say they found it “difficult to understand why Jeremy Newmark was allowed to return to the JLC offices at all, pending further enquiries. In our view, this was not an appropriate measure to take in the circumstances.”
When the allegations had come to light, trustees had been unaware of a legal duty to file a “serious incident report” (SIR) to the Charity Commission and seemed to take no independent legal advice.
It was “hard not to see how the loss of the chief executive in such circumstances could not be thought to merit an SIR,” the inquiry concludes.
The inquiry also said employment legal advice seemed to have been taken from one trustee, James Libson, of World Jewish Relief — a senior lawyer with Mishcon de Reya — although he disputed that he gave it. Sir Mick and other trustees told the inquiry they regularly took legal advice from him.
The inquiry panellists — Dawn Freedman, a retired judge, Derek Zissman, a former vice chairman of the professional services group KPMG, and Michael Scott, a solicitor at Charles Russell Speechlys LLP — say their work was hampered by lack of documentation including management accounts and detailed records of expenditure, and they were unable to obtain electronic back-up of records.
The report says that the JLC’s trustees had been driven by an “entirely reasonable desire” to make good the losses identified in 2013 and could also be seen to have been “motivated by a desire to protect the reputation of the charity so far as possible”.
“It was thought unlikely to be in the charity’s best interests to launch a full enquiry by looking for further losses,” the inquiry commented.
The various factors “could be seen to indicate that there was an intent to conceal the nature of the allegations against Jeremy Newmark”.
Commenting on the actions of the trustees, the report said: “In the belief they were acting in the best interests of the charity, they did not investigate the extent of any loss to the charity save for one bank account… the trustees’ proper course of action would have been to open an internal enquiry into other bank accounts and all the years in which Jeremy Newmark had been chief executive officer.”
Had they launched an inquiry, full records of spending might have been available, the report said.
The trustees would then have also been able to establish if there was “hard evidence of inflation of project budgets, unauthorised transfers of restricted funds, or any other opportunities for personal enrichment at the expense of the charity and therefore consider — with appropriate advice — whether any activity should be reported to the police.”
Trustees believed there was “no room for large-scale fraud” and Sir Mick said that Mr Newmark could not have committed “a material theft” because he did not have access to significant funds.
After Mr Newmark’s departure as chief executive, the JLC’s full council was told he had left because of illhealth, without reference to the financial issues.
Commenting, the JLC’s chairman, Jonathan Goldstein, said: “I would like to start by expressing our sincere gratitude to the whistleblower. Their bravery in highlighting serious concerns was a great service to the charity and the wider community.
“I would also like to thank the independent panel for their time, expertise and care in undertaking this in-depth review to ensure that we fully understand what lessons can be learned.”
The panel had thought of recommending the examination of earlier financial periods. But in view of the difficulty they and the forensic investigators Crowe Clarke Whitehall LLP had in getting reliable information, they concluded this would be unlikely to reveal the evidence required. But they said the charity should now carry out a governance review by specialist lawyers and institute regular training of trustees.
It was hard to understand why Newmark was allowed to return to the JLC offices at all’
● JLC trustees failed to exert ‘proper financial control’ over Newmark’s spending
● Up to £111,000 of ‘potentially questionable expenditure’ under the former CEO
● £9k reimbursement by Newmark recorded as ‘anonymous donation’