Moonbeams

The first complaint against Moonbeams concerned the performance of its trading company. Over four years of operation, the trading company had achieved a turnover of £2.94 million, and a net profit of £185,000.[2] Although these figures might be reasonable for a normal commercial company, they were received with surprise by Moonbeams supporters, who had purchased the goods in the expectation that a far greater proportion of the selling price would reach the charity.

The reason for this was that the lawyers, Lindsays, recommended setting up the trading arm to absorb all the costs of the charity, including the salaries of all employees. This meant that 100% of any donations made to the charity would go to the charity and it could be advertised as such. The trading arm, Moonbeams UK, would pay all the bills.

The petition also revealed that Moonbeams' performance had deteriorated sharply as the trading company's operations expanded. Between July 1998 and March 1999 the company had a turnover of a little less than £100,000, and made a profit of around £40,000. But in the following year to March 2000, while turnover increased to over £550,000, the profit was less than £2,000; and in the year to March 2001 the profit was £2,250 on a turnover of nearly £1 million.[8]

Attention naturally focussed on where the outstanding money had gone. Quoted in Scotland on Sunday, Bill Cleghorn, a forensic accountant appointed by the court, said: "There’s nothing we have come across yet that would indicate there’s anything criminal. We have high administration costs, a lot of travel costs and credit card costs."[1] Moonbeams did indeed sign up for some bad deals but in the opinion of those who worked there, it was better getting more money and helping more families in need than not doing anything.

Reported in local newspaper the Edinburgh Evening News, Willie Power, the founder of Moonbeams, responded: "Obviously, a mistake has been made somewhere, but it has been an unintentional and honest mistake. We are a group of people whose lives have been touched by cancer and want to help in some way. We are not business professionals."[9] Subsequently quoted in Scotland on Sunday, he said: "I truly believe we did our best. There were no flash cars. I think the offices are quite nice but it's not all leather seats, it wasn't 'expense no object'."[2]

Under a Deed of Covenant, Moonbeams' trading company was obliged to transfer almost all its profits to the Moonbeams charity, so that it could be spent on charitable objectives. But the SCO stated in their petition to court that, of the £185,461 net profit raised by the trading company over four years of operation, £101,006 had remained in the trading company's accounts.[10] This is the origin of the often-quoted figure of around £70,000 which finally made its way to the charity.

The SCO's petition also stated that, on a single occasion, Katherine Power - the daughter of the charity's founder - had been allowed to use the charity's house in Florida. The SCO argued that this was contrary to the objects of the charity, as it deprived a family of a child with cancer of the opportunity to use the house.[11]

Responding to the allegation, Willie Power accepted that his daughter had used the house but argued that it would otherwise have been empty at the time. He also stated that travel costs had not been met by the charity.[10]

The SCO's petition further stated that one of Moonbeams' former directors, Gary Easton, had acted as auditor for the charity while also a director, in breach of professional rules.[6] Easton was not, however, a director of either the charity or the trading company at the time of the petition.

The matter was subsequently referred to Easton's professional body, the Association of Certified Chartered Accountants.[12]

Although not referred to in the original petition, two queries concerning payments to directors arose after the court action.

Willie Power, the founder of Moonbeams, was criticized by local media for demanding £3,000 in salary to cover the period immediately prior to the charity's collapse. However, the court-appointed administrator pointed out that he was simply claiming the same rights as any employee.[1] Power had earlier stated that his annual salary from the charity was just £25,000.[2]

In November 2007, four years after the collapse of Moonbeams, Gary Easton made a voluntary agreement to repay an undisclosed portion of the £93,000 he had received from the charity in professional fees. The liquidators had argued that the original fees had been excessive.[13]