Established 2005 Registered Charity No. 1110656

Scottish Charity Register No. SC043760

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Investigating Novas

September 27 2009
Arlington House © S Crubellier Arlington House © S Crubellier
Allegations of financial impropriety have led to an official independent inquiry Exactly what instigated the investigation into the money management of Novas Scarman, until now a large homeless hostel provider, has been kept tightly under wraps, but the organisation has been shrouded in controversy for more than a year. The report, due out last month, has been delayed until July.

One ex-employee did not mince his words when describing what he saw as the charity's problems. "I was astounded by the cavalier approach to financial management and reporting - to my mind, it bordered on fraud," he said. "The majority of senior managers' employment in Novas [..] usually ended in humiliating redundancies in breach of employment practice. It was highly questionable whether a charitable organisation should be spending such large sums of money on paying employees to leave and sign a variety of clauses that prevented them from speaking out or taking the organisation through a legal or employment process."

Novas strongly deny this, stating that all payments were strictly in accordance with contracts. But problems continue to plague the charity: another disgruntled ex-employee, Ermek Sultanov, took Novas to the employment courts earlier this year for unfair dismissal. A couple of ongoing employment tribunals are also waiting to be heard.

Executive management assistant Kellie White defended Novas's position, saying the organisation's focus was shifting way from being a landlord towards primarily providing community-based support, and this had caused inevitable dissatisfaction among staff. "We have had to make some central posts redundant following rationalisation and regionalisation following two mergers," she explained. "We also take a strong stance where employees seriously threaten other staff or customers," she added, although she would not elaborate.

It is not just staff who are unhappy with the new direction. Last August, two board members, Peter Bird and Camden town councillor Patricia Callaghan, resigned when Novas decided to sell off its flagship property, the Arlington House hostel for single men in Camden. The search for prospective landlords for the hostel has been harder than expected, although Novas says One Housing Group had shown interest recently. Callaghan told Inside Housing magazine she was "spitting blood" over the decision, which she blamed on financial pressure from massive investment in social enterprise as well as historic debts arising from Novas's merger with Path and the Scarman Trust in December 2007.

She declined to comment on the current inquiry before the report is published, stating only that it had been a "rigorous process" and she would be able to say more soon.