The Closure of QuilliamSome Questions for Maajid Nawaz
People are wondering why a £3.375m windfall wasn’t enough to keep Nawaz’s think tank going. No one suggests he’s done anything wrong, but Brian Cathcart argues clarity would be welcome
The Quilliam Foundation folded earlier this month owing £600,000 and blaming the Covid pandemic. A think tank whose stated mission was to fight Islamist extremism, it had been popular with the far-right, the Conservative government and the UK press, but was loathed by many Muslims.
Supporters and critics alike will have been surprised by the closure, not least because it is less than three years since Quilliam and its high-profile boss, Maajid Nawaz, shared in a $3.375 million libel settlement in the United States.
Since Quilliam was a relatively small non-profit organisation it is curious that a windfall on such a scale was not enough to keep it afloat longer, even allowing for the Covid pandemic. So, while no one is suggesting that anything unlawful has occurred, it is natural to ask what happened.
We examined the publicly available financial records for Quilliam in both the UK and the US and could find no clear evidence that the $3.375 million found its way into the Quilliam coffers. Importantly, this is not proof that it did not, since the accounts are either sketchy (though within the law) or long overdue (again no law has been broken). But it leaves the matter open, so we put some questions about it to Nawaz himself.
Nine months after the SPLC settlement, however, Quilliam UK was in trouble.
Nawaz, perhaps best known in Britain today as an LBC radio presenter, was the sole director of Quilliam UK and was chair of a three-person board of Quilliam US (which included his wife). We approached him twice by email over the past five days but received no response.
As explained below, the US libel settlement document in 2018 stated that the $3.375 million would be used for a specific purpose. On this basis, and because Quilliam was a very public organisation heavily engaged in public policy issues, we believe that clarity on how it was spent would be welcome and in the public interest – although again there is no suggestion that anyone has done anything wrong.
The SPLC Settlement
In June 2018 the well-known American charity Southern Poverty Law Center (SPLC) agreed to apologise and pay $3.375 million in compensation to three parties: Maajid Nawaz, the Quilliam Foundation Ltd (of London) and the Quilliam Foundation Inc (the US branch). These parties had jointly initiated legal proceedings over an SPLC publication that identified Nawaz and Quilliam as anti-Muslim extremists.
In its widely disseminated apology, SPLC stated that its description of Nawaz and Quilliam had been ‘simply wrong’ and added: ‘As part of our settlement, we have paid $3.375 million to Mr. Nawaz and Quilliam to fund their work to fight anti-Muslim bigotry and extremism.’
The detail of this was set out in a legal ‘Settlement Agreement and Release’, the first paragraph of which read as follows:
‘The SPLC, in full and final settlement of Nawaz’s and Quilliam’s claims against the SPLC, and in consideration of the other rights and relief set forth below, shall pay the sum of Three Million Three Hundred Seventy-Five U.S. Dollars ($3,375,000.00) (the “Payment”) to an escrow account held on behalf of Nawaz and Quilliam by Clare Locke LLP, within 12 business days of the effective date, which Nawaz and Quilliam intend to fund work fighting anti-Muslim bigotry and extremism.’
That was signed by representatives of the four parties – the SPLC, Nawaz, Quilliam UK and Quilliam US.
Nawaz subsequently stated in an interview that $400,000 of this sum was required to pay legal fees. That left just short of $3 million.
If Quilliam UK had received a one-third share, that would have been about £700,000 – a large cash injection for a company of its size. No sum of that order shows up in the accounts filed at Companies House in London.
It is possible, since small company accounts are not detailed, that such a sum could have gone in and out quickly without finding its way on to the Companies House record, but that seems unlikely given this company’s size. If it had received a cash boost on such a scale that would surely reveal itself in some way on the bottom line?
In fact, the financial statements tell a different story: Quilliam UK did not get richer in 2018/19, it got poorer.
Three months before the SPLC settlement, in March 2018, it was a healthy going concern. Its annual turnover – money in and out – was roughly £1m, and though it had made a loss of £23,000 that was not a significant sum in context. The company had 11 employees.
Nine months after the SPLC settlement, however, Quilliam UK was in trouble.
Its return for the year to March 2019 showed that it still employed 11 people and that its losses had risen to £80,000. But the most striking feature of the statement was that the company was owed £746,000 and that it owed £830,000.
In other words, in the year when we might have expected it to receive a windfall, Quilliam developed a serious cash flow problem and was waiting for payments roughly equivalent to three-quarters of a normal year’s turnover.
No less strikingly, Nawaz apparently attempted to bail the company out from his own pocket, lending it in excess of £760,000. Yet even so the coffers were nearly empty. Quilliam had only £1,047 cash ‘in hand or at bank’ and only £3,062 in tangible assets.
So bad was the situation that, according to a subsequent employment tribunal judgment, days before the end of the financial year, on 28 March 2019, Quilliam told one of its employees, a researcher called Muna Adil Khan, that ‘it was unable to pay her as it had run out of funds’. Though Khan continued to work for Quilliam until that August, her salary was not paid in any of those five months.
The company closed on 9 April. Nawaz tweeted: ‘Due to the hardship of maintaining a non-profit during Covid lockdowns, we took the tough decision to close Quilliam down for good. This was finalised today. A huge thank you to all those who supported us over the years. We are now looking forward to a new post-Covid future.’
The Nawaz Loan
If Quilliam UK did not receive any share of the SPLC money in its own right, it none the less received that large personal loan from Nawaz.
The loan is recorded in the accounts for 2018/19, where a note to page 4 states: ‘Included within Other creditors is £760,000, being the balance of a loan from the director of the company.’ By implication the original sum he lent had been even higher, while the balance was described as ‘falling due within one year’, meaning that it should have been repaid by the end of March 2020.
It looks as though, by the time the company folded earlier this month, Nawaz had got £353,000 of his money back, or almost half. The ‘Statement of Affairs’ filed last week, which is the liquidator’s account of the state of the company on closure, showed that by the beginning of this month the debt to Nawaz had fallen to £407,000.
It is not clear when this partial repayment occurred or how Quilliam managed it in a period when it was apparently struggling to pay its staff, then making them redundant and finally closing its offices. But again there is no evidence to suggest that any wrongdoing occurred.
Meanwhile, the company was also borrowing elsewhere. Probably as recently as August last year, Quilliam UK received a large loan from HSBC. The Statement of Affairs identifies the bank as the company’s second-biggest creditor, with £200,000 outstanding on that debt.
A lengthy document among the filings at Companies House, dated August 2020, shows that HSBC had a ‘floating charge’ over Quilliam UK, a financial device designed to bump it up the queue of creditors if things went wrong. But whatever assets the company may have had last August it had almost none by this April, and it looks as though HSBC has lost its money.
Quilliam had a US branch, Quilliam Foundation Inc, registered as a charity in California. It filed annual financial returns up to the end of 2017, but none after that. (The US Internal Revenue Service (IRS) permits a three-year backlog and allows some months for filing time so it seems that Quilliam US is not in breach of the IRS code, though time is presumably running out.)
This absence of recent returns means that it is not possible to see whether any of the $3 million from the SPLC libel settlement found its way on to the books of Quilliam US. All we can say is that at the end of 2017 – before the SPLC settlement – Quilliam US was financially healthy.
Although no formal statement has been made this month about the fate of Quilliam US, it appears to have closed at the same time as Quilliam UK. The website serving both was shut down. The phone number in California is a dead line. An email we sent has gone unanswered. There is no other evidence of activity.
We have one possible clue about the financial status of Quilliam US, and it is in the UK liquidator’s Statement of Affairs. Among the few listed assets is ‘Intercompany Debtor – Quilliam North America’, and here it states that Quilliam US owes Quilliam UK £22,933. Beside this, under the heading ‘Estimated to Realise’, the liquidator has written ‘Nil’.
in other words, UK creditors should expect no money to be recouped from Quilliam US, suggesting that the American operation, like Quilliam UK, was out of funds.
To repeat, there is no suggestion here that Nawaz or either of the companies has behaved unlawfully. Instead, there is a striking absence of information about a matter we consider to be in the public interest.
Quilliam and Nawaz were libelled by SPLC, an important charity. This charity paid them a very large sum in compensation. This arrangement was sealed in an agreement sealed by Quilliam US, Quilliam UK and Nawaz, as distinct parties, and they jointly stated their intention to use the money “to fund work fighting anti-Muslim bigotry and extremism”.
Less than three years later the Quilliam Foundation, which was under Nawaz’s personal control, is in liquidation, owing £600,000. Byline Times has asked Nawaz privately how the $3.375 million was spent and we received no response. We would welcome clarity on the point.