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| Salvation Army pays £11m for recycling company after questions over directors' pay | |
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| The Salvation Army is paying nearly £11m to buy the controversial company which holds the long-term contract to collect clothes from its recycling banks. | The Salvation Army is paying nearly £11m to buy the controversial company which holds the long-term contract to collect clothes from its recycling banks. |
| The charity is the largest clothing recycling operation in Britain, and with 4,500 clothing banks, many in supermarket car parks, it should have cashed in handsomely in recent years as the price of second-hand garments soared. But while returns have improved, a Guardian investigation last year into Kettering Textiles – the Salvation Army's collection contractor – revealed that millions of pounds had been paid out in directors' salaries. | The charity is the largest clothing recycling operation in Britain, and with 4,500 clothing banks, many in supermarket car parks, it should have cashed in handsomely in recent years as the price of second-hand garments soared. But while returns have improved, a Guardian investigation last year into Kettering Textiles – the Salvation Army's collection contractor – revealed that millions of pounds had been paid out in directors' salaries. |
| For the three years to March 2010 Kettering's highest paid-director received an average salary, bonus and pension contribution of just over £1m each year – a considerable sum for a business with a turnover of less than £24m. In total, Kettering directors earned almost £10m over the three-year period, while the charity received £16.3m. | For the three years to March 2010 Kettering's highest paid-director received an average salary, bonus and pension contribution of just over £1m each year – a considerable sum for a business with a turnover of less than £24m. In total, Kettering directors earned almost £10m over the three-year period, while the charity received £16.3m. |
| The contractor group – controlled and operated by Nigel Hanger, a race-horse-owning textile trader – is being acquired by the Salvation Army's trading arm in a highly unorthodox move for the charity sector. "We believe this is the first deal of its kind in the charitable sector with a charity acquiring a commercial operator," the Salvation Army said in a statement. | The contractor group – controlled and operated by Nigel Hanger, a race-horse-owning textile trader – is being acquired by the Salvation Army's trading arm in a highly unorthodox move for the charity sector. "We believe this is the first deal of its kind in the charitable sector with a charity acquiring a commercial operator," the Salvation Army said in a statement. |
| The deal will provide another multimillion-pound windfall for Hanger. Depending on future earnings, Kettering could be worth up to £10.75m. According to the company's latest annual return, 78% of its shares are owned by Hanger, the rest by fellow director Luigi Orsi. | The deal will provide another multimillion-pound windfall for Hanger. Depending on future earnings, Kettering could be worth up to £10.75m. According to the company's latest annual return, 78% of its shares are owned by Hanger, the rest by fellow director Luigi Orsi. |
| The Salvation Army said: "The contract was due to be renegotiated in four years but by buying Kettering Textiles, [the charity] gains Kettering Textile's employees, know-how and customer base now, and ensures [it has] 100% of profits after just three years." | The Salvation Army said: "The contract was due to be renegotiated in four years but by buying Kettering Textiles, [the charity] gains Kettering Textile's employees, know-how and customer base now, and ensures [it has] 100% of profits after just three years." |
| Hanger, who is 57, said: "As I approach retirement age, I have made no secret of my desire to step back from running the business." He said the deal was in the best interests of his firm's employees, customers and suppliers. | Hanger, who is 57, said: "As I approach retirement age, I have made no secret of my desire to step back from running the business." He said the deal was in the best interests of his firm's employees, customers and suppliers. |
| As well as making a lucrative living from running the clothes recycling business for the Salvation Army, until January Hanger also sat on the board of the charity's trading arm, which awarded the contract to Kettering. | |
| Kettering bosses, including Hanger, will continue to operate the clothes recycling collection. Lieutenant Colonel Ivor Telfer, chairman of the charity's trading arm, refused to say how much they would be paid, only that it would be "in line" with salaries in the trading group. The best paid director of the Salvation Army Trading Company last year received £136,078. | Kettering bosses, including Hanger, will continue to operate the clothes recycling collection. Lieutenant Colonel Ivor Telfer, chairman of the charity's trading arm, refused to say how much they would be paid, only that it would be "in line" with salaries in the trading group. The best paid director of the Salvation Army Trading Company last year received £136,078. |
| It is not known how much Hanger and his fellow directors have earned from Kettering since the Guardian's investigation. The company has not produced accounts beyond March 2010. | It is not known how much Hanger and his fellow directors have earned from Kettering since the Guardian's investigation. The company has not produced accounts beyond March 2010. |
| In its latest annual accounts the Salvation Army Trading Company said: "In January 2011 a national newspaper published a sensationalist article regarding [this company] and its textile collection contractor. Following this coverage both the Charities Commission and the Fundraising Standards Board gave [the Salvation Army] an entirely clean report, both in terms of its operational relationship with Kettering and its governance of that relationship." | In its latest annual accounts the Salvation Army Trading Company said: "In January 2011 a national newspaper published a sensationalist article regarding [this company] and its textile collection contractor. Following this coverage both the Charities Commission and the Fundraising Standards Board gave [the Salvation Army] an entirely clean report, both in terms of its operational relationship with Kettering and its governance of that relationship." |
| The two regulatory bodies did not find a breach of their rules other than a failure to state clearly on bins and bags the nature of the profit split, which sees a third of recycling earnings going to Kettering. | The two regulatory bodies did not find a breach of their rules other than a failure to state clearly on bins and bags the nature of the profit split, which sees a third of recycling earnings going to Kettering. |
| The Charities Commission said: "On the basis of the information the charity has provided, it would appear that any conflicts of interest which could arise from Mr Hangar's [sic] directorship of Salvation Army Trading Company have been properly identified and managed appropriately." | The Charities Commission said: "On the basis of the information the charity has provided, it would appear that any conflicts of interest which could arise from Mr Hangar's [sic] directorship of Salvation Army Trading Company have been properly identified and managed appropriately." |
| Under commission rules charities are obliged to seek the best value they can from contractors. However, the charity said there was no requirement on the Salvation Army to put tenders out for the recycling business, which has been outsourced to Kettering for 21 years. | Under commission rules charities are obliged to seek the best value they can from contractors. However, the charity said there was no requirement on the Salvation Army to put tenders out for the recycling business, which has been outsourced to Kettering for 21 years. |