A HEALTH company which was awarded almost £1 million of Lottery cash is under investigation after going bust owing £200,000.
West Lothian Food and Health Development (Welfehd), based in Deans, Livingston, went into liquidat
ion this week after a massive black hole was found in its accounts.
The organisation was set up as a Company Ltd By Guarantee in December 2006 to act as the central buyer and distributor of fresh fruit and vegetables for community food outlets and kids' school packed lunches, promoting local produce from the West Lothian area.
It received funding from a range of sources including West Lothian Council, Voluntary Sector Gateway West Lothian and the Big Lottery Fund, which awarded Welfehd £915,978 in September 2008 – the largest Lottery grant ever made to any organisation in the county.
An internal investigation was launched in September last year by its then board and operations manager Alistair Strickland was suspended after it was found he had taken "relatively" small amounts of money from the business's account for personal use.
The money included a £500 cash withdrawal and £100 which was spent on toys.
Questions were also raised over high expenses spent on a working trip to Belgium as well as other members of his family being employed in the business.
The former manager has since paid back the £600 and no criminal charges were brought following a police investigation. A police spokesman said the debts were put down to "bad business practices".
Mr Strickland was sacked by the new board which took over after its AGM in October.
He said: "I took the £500 as an advance on my wages and I paid for something else from the wrong Paypal account, but this was not accepted and that was the main reason they got rid of me.
"They said I spent too much on the Belgium trip but I proved that I didn't and they accepted that.
"This is a witch-hunt. I cannot shed any light as to how it ended up £200,000 in the red. I left nine months ago."
The new board tried to save the business before declaring it insolvent as the historic debts eventually led to its downfall.
Councillor Willie Boyle – executive member for the voluntary sector, who was a member of the new board – said: "This has not been an easy decision as a great deal of effort and commitment has been squeezed into the attempted turnaround of the organisation.
"Due to circumstances outwith the control of the current board, an inherited financial position put us into a position we could not trade out of. It emerged that there was a deficit of over £200,000 due to various flawed procedures and governance.
As there are ongoing investigations at the moment it would not be prudent to say more."
A spokeswoman from The Big Lottery said it froze the £915,978 grant after it was alerted to the financial difficulties and that Welfehd had only received £170,000 for operating costs. The rest of the cash was going to help pay for a new purpose-built facility.
The company employed 12 people.
Cllr Boyle thanked those who tried to save the business as they believed it was "viable".
He added: "The best efforts of all involved have disappointingly not been successful, but the fight was appreciated."
"It would have been too easy to close the doors and walk away leaving others at the time to shoulder the responsibilities."
Efforts are being made to fulfil the commitment to all customers, volunteers and communities.
