Follow the money

Collection box at entrance to Ocean Club Tapas Bar in Praia da Luz,

July 2007, with hand-written note from Kate McCann.

So what did happen to the ‘reward money’ donated by News of the World readers in 2007 and handed to the McCanns’ company in April 2011?

One thing is clear: it wasn’t used to search for Madeleine.

News UK have stated that:

the Reward Fund payout was in addition to, separate from and not included within the payment of £550,000 for serialisation rights to Mrs McCann’s book.

According to documents at Companies House,  income to Madeleine’s Fund: Leaving No Stone Unturned Ltd in year ended March 31 2012, the period covering the April 2011 transfer, totalled £856,393.

That financial year, for the first time in the five-year reporting history of the company, income was split into Restricted and Unrestricted Funds.

This is a common practice among charities. Typically, a donor will request that the money given is used to support a particular aspect of the charity’s activities.

But Madeleine’s Fund isn’t a charity. It is a limited company.

Income under Restricted Funds is shown as £550,000, precisely the figure paid by News International for serialisation rights to Mrs McCann’s book.

On p8 of the accounts, it is noted:

Following the publication of Kate McCann’s book, ‘Madeleine: Our daughter’s disappearance and the continuing search for her’, £550,000 was donated  for the direct costs of the search for, and the investigation into the disappearance of, Madeleine.

No explanation is offered in the accounts as to why it was deemed necessary to make this distinction.

Given that the ‘reward money’ does not appear within Restricted Funds, it can only have been accounted for within Unrestricted Funds.

It must form part of the £306,393 income other than that from News International’s serialisations rights payment.

Which, of course, means it could be used for expenditure other than direct costs of the search for Madeleine.

In year ended March 31 2012, that expenditure amounted to £272,764.

How did the Fund spend so much money in one year on costs other than directly searching for Madeleine?

The Fund’s website, findmadeleine.com, claims it operates to “the highest standards of transparency and accountability” but in reality, as the company’s accounts note, “the financial statements have been prepared in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006 and in accordance with the Financial Reporting Standard for Smaller Entities (effective April 2008)”.

In practice, this means the Fund is required to offer much less information on its activities than it would if it was indeed a charity.

Here’s how that Unrestricted Funds expenditure of £272,764 is broken down within the published accounts:

Merchandising and Campaign Costs                        242,727

Administration Expenses                                            24,909

Tax on surplus on ordinary activities                            5,128

But what are those first two figures paying for?

According to the Director’s Report for that year, the Fund:

-       continued to pay for a 24 hour, 7 days a week telephone line to receive and capture information provided by the general public worldwide

-       provided part-time administrative support to aid the investigation and campaign to find Madeleine (campaign coordinator and media liaison)

-       facilitated complete hand over of all material relating to Madeleine’s abduction held by the Fund to the MPS

-       supported a small investigation team, including a Portuguese speaker to lead a private search for Madeleine. Since March 2012, private investigation of lines of enquiry has been suspended whilst the MPS review progresses. The private investigation team employed by the Fund continue to cooperate and work with the Metropolitan Police force as and when necessary.

-       continued to fund the awareness-raising campaign to ensure that Madeleine is not forgotten and to encourage the general public to remain vigilant. This has included the running of the Find Madeleine website (www.findmadeleine.com)

-       continued to fund and work in partnership with a specialist Portuguese communications agency to ensure that our message is communicates as widely and accurately as possible in Portugal.

The accounts offer us no guidance, but it might be reasonable to assume that those first four activities were met from Restricted Funds - where expenditure in that year amounted to an additional £234,086 - in that they appear to be directly related to ‘the search for Madeleine’.

(Alternatively, the ‘part-time administrative support’ may form part of the £24,909 Administration Expenses, met from Unrestricted Funds. The Fund doesn’t say.)

But how did the Fund spend nearly a quarter of a million pounds on Merchandising and Campaign Costs?

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Perhaps some clues to the expenditure can be found back in 2008, when the Fund published its first set of accounts, covering May 2007  to March 2008.

Then it had offered, quite reasonably, a breakdown of its expenditure:

Extract from accounts of Madeleine's Fund: Leaving No Stone Unturned Ltd
for year ending 31 March 2008.

That breakdown showed that of the £815k total expenditure, just £250k, a curiously round number, had been spent on ‘Search fees’.

Nearly £82k had been spent on ‘Awareness’, perhaps advertising costs. Over £37k had been spent on a rudimentary website.

£123k had been spent on Campaign Management, fees to PR professionals.

£26k had been spent on Media Monitoring, which Wikipedia notes as ‘a beneficial tool to evaluate the efforts and progress of a PR firm.’

But perhaps most surprising of all were some of the other costs identified.

Legal fees and expenses amounted to over £111k. What these legal fees covered remains unclear, but what they didn’t cover were legal fees associated with the constitution of the Fund itself. Those amounted to an additional £68k.

Administering the Fund cost another £36k in ‘Fund professional fees’, £13k for ‘Auditors’ remuneration’ and £7k ‘Accountancy fees’.

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That would be the only occasion on which the Fund would offer any breakdown of its expenditure. For the next five years, it simply restricted itself to one figure for Merchandise and Campaign Costs, another for Administration expenses and a third for Tax.

It would perhaps be wrong to compare the breakdown of expenditure in 2007/08 to that in 2011/12.

But it seems unlikely that News of the World readers who, in 2007, had given their cash as a reward for information leading to the safe return of Madeleine - and had been told that, in the event of the reward not being claimed, it would be paid instead to three children’s charities - ever envisaged that their donations would be used to pay lawyers, auditors, accountants and PR guys.

And with not a word of thanks, this time, from Kate and Gerry McCann.