'Payroll a struggle every month' at Kids Company, High Court hears

The Official Receiver told the High Court yesterday that “payroll was a struggle every month” at the former charity Kids Company.

Lesley Anderson, on behalf of the OR, put it to former trustee Francesca Robinson that the only way the charity could survive was to bring forward donations and to increase the amount of loans it took on.

The OR is seeking to secure disqualification from senior positions for periods of up to six years against Robinson and six other trustees, plus former chief executive Camila  Batmanghelidjh, after the charity collapsed in 2015.

Anderson went through a series of examples throughout the 2014 calendar year that included correspondence between Batmanghelidjh and donors, and minutes of committee meetings.

In May of that year, the court heard that the charity had half a million pounds in the bank but still might struggle to meet payroll, and in August, a £109,000 payment from Comic Relief had to be brought forward.

Anderson said this pointed to a pattern of poor financial management. She referenced the minutes of a governance committee meeting in October 2014 that acknowledged “payroll is a struggle every month”.

Robinson maintained that the charity was always open about its liquidity issues, and said it was a fact that the charity did always make payroll, apart from a single time in November 2014 when it was a day late.

“We were always confident we had reasonable grounds to say we were getting other money,” said Robinson.

The court heard how documents submitted at a finance committee meeting in September 2013 for the following year had shown a deficit every month. 

But a much more optimistic cash flow forecast was submitted to auditors just a week later.

The difference amounted to millions of pounds, said Anderson, who asked Robinson to identify who had changed the forecasts.

“I can’t say which one is the correct one or explain who and why they were changed,” she replied.

Anderson said this demonstrated that the trustees were satisfied as long as the auditors were.

The court also heard an email Robinson sent in March 2015 in which she described the “intolerable pressure of impending insolvency”.

Anderson asked why this part of the email was omitted from Robinson’s witness statement.

“I don’t know, what I do know is we’re talking about it out of context,” she said.

Anderson said it was highly significant and suggested Robinson was not a reliable narrator of her evidence if she was willing to omit that part of the email.

Robinson said she did not think that was fair and said it was convenient looking at things with hindsight.

Later, Robinson said it became more difficult to get things done once Diane Hamilton, interim director of finance and accountability, Mandy Lloyd, director of development (office of the chief executive), and Adrian Stones, director of human resources, handed in their notice.

Anderson suggested that the three directors were “treated pretty shabbily by the trustees.”

But Robinson said: “I totally disagree with that.”

Last week, Batmanghelidjh was accused of making “broken promises” when it came to short-term loan agreements.

The court also heard that Kids Company was issued with a winding up order over a £500,000 unpaid tax bill a year before it finally collapsed.

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