A CHARITY which received £1 million-a-year of taxpayers' money to try to combat racism in North Staffordshire has been forced to shut after sinking into debt.

North Staffordshire Racial Equality Council (REC) is being wound up after more than 30 years, because of "serious financial problems".

Nine staff have been made redundant and workers and trustees are clearing out the charity's office in Raymond Street, Hanley.

It is not yet known how much the independent voluntary organisation owes creditors. But the charity today confirmed it does not have enough money to see it through February.

Administrators are expected to be called in on Monday.

The REC had a budget of more than £1 million a year, mostly through grants from the Government, local councils and other organisations, including Staffordshire Police, health bodies for Stoke-on-Trent and North Staffordshire, and the Heritage Lottery Fund.

But the Charity Commission, which regulates the voluntary sector, has not received any REC accounts since February 2006.

A spokesman said: "It appears no accounts have been received for the past two years, which is very unusual."

The last return was for the 2004/05 financial year, meaning that up to £4 million of public money is now unaccounted for.

The 2004/05 accounts listed annual income totalling £1.09 million, including £84,593 from Stoke-on-Trent City Council, £53,339 from the Commission For Racial Equality and £82,403 from the Government's Community Fund.

Concerns were first raised about the REC in September when the city council asked about the lack of audited accounts.

The council offered to sort out the charity's finances and a team of officers examined the books. But earlier this month the authority told trustees the charity could not continue. The REC's senior officer, director Vince Simpson, was uncontactable yesterday.

REC trustee Angela Glendenning said it was still piecing together what had gone wrong. She added: "The financial position was worse than we expected. There was a glaring absence of financial systems and management procedures.

"The deficit was revealed as very serious indeed."

The REC worked to soothe community tensions, provide training for businesses, councils and groups, and speak up for ethnic communities in a city with nine BNP councillors.

She added: "We are very upset this has happened, particularly for our staff who have been made redundant."

City council interim chief executive Chris Harman said: "It is clear the REC has got into serious financial difficulties and I understand the trustees have decided to place the organisation into administration."