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By Jack Royston
Chief Royal Correspondent
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King Charles III's charity the King's Foundation has suffered a fresh blow after a regulator found "serious" and "unacceptable" failures by its former boss.
However, an investigation spanning more than three years by the Office of the Scottish Charities Regulator stopped short of alleging misconduct.
The probe came after allegations help securing a knighthood and citizenship had been offered to a Saudi tycoon in exchange for donations.
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The watchdog's report, seen by Newsweek, reads: "The inquiry found the historical governance of the charity had not always been up to the standard required.
"This finding is in relation to the historical approach to decision-making and record-keeping. However, the inquiry did not find evidence of misconduct by any of the former or current trustees who were in office at the time."
A spokesperson for The King's Foundation said: "As the report acknowledges, the Office of the Scottish Charity Regulator (OSCR) is satisfied with the improvements made by The King's Foundation in recent years, including the introduction of new and robust governance practices."
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Why It Matters
Michael Fawcett quit as chief executive of the charity in 2021, when it was still known as the Prince's Foundation.
His departure followed an article in the Mail on Sunday detailing a letter he sent tycoon Sheikh Marei Mubarak Mahfouz bin Mahfouz offering help securing a knighthood and U.K. citizenship in return for charitable donations.
The Metropolitan Police investigated but no criminal charges were brought, though the regulator's own probe continued to hang over the organization.
On one reading, the report offers a damning insight into a chaotic organization whose significant failures were only exposed following investigations by the British press.
On the other hand, with the regulatory investigation over the charity will now likely attempt to move on from a scandal that has dogged its reputation for more than three years and will be able to cling to the finding that there was no misconduct.
Newsweek contacted representatives of Fawcett and the king for comment.
What To Know
The OSCR's report references Fawcett's offer to Mahfouz to help him secure citizenship and a knighthood in return for donations, but it otherwise appears to have largely swerved the subject, instead noting the separate police investigation.
However, it reviewed a number of other concerns, including that "an item of home furnishing" was bought by the charity for a "former charity trustee for their personal use."
There were also major concerns over highly valuable artwork that was uninsured for two years and a bizarre incident in which a donation by a Russian businessman was routed through Mahfouz's foundation.
Banker Dmitry Leus believed his donation had gone straight to the King's Foundation, yet after the irregularity was picked up the cash was handed back to Mahfouz's foundation.
Instead of returning it to Leus, they donated it to another U.K. charity. The saga led to a separate investigation by the Charity Commission for England and Wales which saw an external fixer Michael Wynne-Parker banned from being a charity trustee for 12 years.
Uninsured Artwork
A further section of the report relates to two highly valued artworks being loaned to the charity by a donor in 2017, only for questions to be raised in 2019 over whether they might be fake.
This appears to overlap with a report in the Mail on Sunday that a the charity had been lent a £50 million Monet, a £42 million Picasso and a £12 million Dali that had in fact been painted by a notorious forger.
The OSCR report read: "The artwork review also established that the insurance for the artwork lapsed in 2017 and that the former CEO and a former member of the executive team who no longer works at the charity, were notified of this.
"Despite the former CEO being told the insurance had lapsed in 2017, the inquiry found that the Board were not informed of the lack of insurance until the artwork review was conducted in November 2019."
That suggests that for two years the charity was in possession of loaned artworks valued at dizzyingly high sums with no insurance to protect the charity from liability had they been damaged or stolen.
"The former CEO stated that he and a colleague, who no longer works at the charity, dealt with different streams of communication and different areas of the administration regarding the artwork," the OSCR report reads.
"These dual responsibilities, along with the difficult and chaotic nature of the correspondence with Donor B, led to the former CEO not being sufficiently clear in his understanding of the position."
A further section of the report read: "The charity told the inquiry that they had become aware that the former CEO's personal events company was in receipt of payments from the charity via a third-party company, in contravention of a prior agreement with the Board."
What People Are Saying
The OSCR report read: "The charity was exposed to significant risk due to the paintings not being insured. It was wholly unacceptable for the charity to have been placed in this position," the report added. "The failure to brief the charity trustees was serious."
However, the investigation concluded: "It has not been possible for OSCR to establish when the former CEO realized that the insurance had lapsed and the position had not been rectified, and therefore when the charity trustees should have been informed of
this.
"Based on the information gathered, OSCR does not therefore consider there to have been misconduct on the part of the former CEO."
A spokesperson for The King's Foundation said: "The findings of this report into historic activity at the organisation have been noted by The King's Foundation.
"As the report acknowledges, the Office of the Scottish Charity Regulator (OSCR) is satisfied with the improvements made by The King's Foundation in recent years, including the introduction of new and robust governance practices.
"Following the conclusion of OSCR's investigation, we look forward to furthering the impact of our charitable work and achievements as we enter the new year."
Graham Smith, chief executive of anti-monarchy campaign group Republic, told Newsweek: "The charity commission both sides of the border has been fairly toothless in looking at these matters.
"They don't seem to look very deeply at these issues. The conduct in relation to fundraising raises really serious questions.
"It does give the impression that the royals can act with impunity."
Fawcett's original letter, which sparked the investigation, read: "In light of the ongoing and most recent generosity of His Excellency, Sheikh Marei Mubarak Mahfouz bin Mahfouz I am happy to confirm to you, in confidence, that we are willing and happy to support and contribute to the application for Citizenship.
"I can further confirm that we are willing to make [an] application to increase His Excellency's honor from Honorary CBE to that of KBE [knighthood] in accordance with Her Majesty's Honours Committee.
"Both of these applications will be made in response to the most recent and anticipated support of the Trust and in connection with his ongoing commitment generally within the United Kingdom. I hope this confirmation is sufficient in allowing us to go forward."
What Happens Next
The conclusion of the OSCR investigation removes the final cloud from the charity, which will now look to try to move past the scandal.
Jack Royston is chief royal correspondent for Newsweek*, based in London. You can find him on X, formerly Twitter, at @jack_royston and read his stories on* Newsweek*'s* The Royals Facebook page.
Do you have a question about Charles and Camilla, William and Kate, Meghan Markle and Prince Harry, or their family that you would like our experienced royal correspondents to answer? Email royals@newsweek.com. We'd love to hear from you.
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