Council Takes Legal Route To Recover Charity Debt

Aberdeen City Council is taking legal action against a charity to try and recoup a £22,402 debt, it emerged last night. Multi-Ethnic Aberdeen Ltd (Meal), which leases an office in the city’s Belmont Street from the authority, is said to have a “long-standing issue” with settling a bill connected to rent arrears.

Officials are today, at a meeting of the full council, seeking permission to continue taking legal action against the charity to break the lease and recoup the money which is owed.

They also want approval to stop the organisation, which promotes tolerance and racial harmony, from renewing the tenure of the building when it expires in September.

Councillors have been told that failure to stop the lease could result in an “escalating level of unpaid rental income or service charges”.

Writing in a report leaked to the Press and Journal, corporate accounting manager, Jonathan Belford, said of the building: “This is not an effective or efficient means of utilising the assets of the council and requires action to be taken to prevent an escalation of this.”

He added that the situation had the potential for “extremely serious consequences” to the charity because the council’s support for it would be diminished.

According to the report, £21,844 of the sum owed up until the end of March constitutes building service charges. The remainder of the balance is made up of rent owed but it is understood that the charity rent payments are up to date.

As a result of the unpaid bill, the city council decided last year to withhold a £20,000 grant from the charity, which has leased the building for six years, until it had produced details of its historical financial position, business plan and budget.

However, it has failed to provide officials with any documentation which means it cannot use any of the money to settle its outstanding debt.

A source said: “This situation has been going on for years and it needs to be sorted out once and for all.

“It is quite unbelievable that the charity has failed to produce its accounts and now, even at the end of this present council, it has still failed to do so.”

According to the report, the charity has leased the property for £31,000 a year, which includes an annual service charge fee of £8,500, since 2002.

Councillors have been told there is a chance that the debt will have to be written off if it cannot be recovered.

It is understood that the charity’s accountants are in the final stages of preparing its accounts for scrutiny.

An insider told the P &J: “The charity is in a catch-22 situation and it does not see how the council can expect it to pay this debt, which came like a bolt from the blue, if they withhold funding. It does not make much sense to me.”

The charity was told it could re-locate to a smaller, more suitable property in West North Street last June but it the council decided to lease the building to another organisation.

Despite the content of the report, it is understood that the council is willing to resolve the issue so the charity can remain trading at the premises.

It is understood that it has already repaid some of the debt and after the grant is released, the outstanding balance would be around £4,000.

Habib Malik, managing director of MEAL, declined to make any comment until after the issue was discussed today.

Neil Fletcher, convener of the resources management committee which originally handled the issue, said it would be inappropriate to make any comment ahead of the meeting.