Responsibility for Kids Company collapse lay with negligent trustees, report concludes

The final report of the Public Administration and Constitutional Affairs Committee on the issue, published today, says there was an 'extraordinary catalogue of failures'

Kids Company: 'catalogue of failures'
Kids Company: 'catalogue of failures'

Kids Company collapsed because of an "extraordinary catalogue of failures", and the ultimate responsibility lay with the charity’s "negligent" trustees, an inquiry by the Public Administration and Constitutional Affairs Committee has concluded.

Published today, the final report of the committee’s inquiry into Whitehall’s relationship with Kids Company, which was launched in September after the charity closed the previous month, says that although the government and regulators, including the Charity Commission, had lessons to learn from the charity’s failure, the ultimate responsibility for Kids Company’s demise rested with its trustees.

The report says the board at Kids Company ignored repeated warnings about the charity’s financial health, failed to provide robust evidence of the charity’s outcomes and did not adequately address increasing concerns about the behaviour of its staff and the suitability of its programmes, partly because of a lack of experience of youth services among trustees.

It says trustees’ "negligent financial management" rendered the charity unable to survive when allegations of sexual abuse last August caused several philanthropists to withdraw donations they had pledged.

Bernard Jenkin, chair of the PACAC and the Conservative MP for Harwich and North Essex, said in a statement: "In the course of this inquiry the committee has heard what can only be described as an extraordinary catalogue of failures of governance and control at every level: trustees, auditors, inspectors, regulators and government.

"There has been a litany of allegations of inappropriate ‘therapies’, lavish spending and abuse of power within the organisation, and we hope this episode highlights to all trustees that protecting the reputation of an organisation is a core element of good governance."

The report also criticises senior ministers from successive governments for handing out "tens of millions of pounds of public money" to Kids Company over the course of its existence despite a lack of robust evidence about the quality of the charity’s outcomes, value for money or governance. In doing this, it says, the government gave tacit approval to an "unsustainable and inadequate business model", and eroded any incentive for the charity to address its own governance and management failings.

The charity received more than £42m of central government funding between 2002 and its closure in August 2015.

The report says that Camila Batmanghelidjh, the charity’s founder and chief executive, appeared to captivate some of the UK’s most senior political figures with the "force of her personality" and the "spin and profile" she generated for the charity.

It says it was remarkable that so few people had complained to the Charity Commission about Kids Company, which it says reflects the regulator’s "failure to make people aware of this possibility".

Speaking to Third Sector in December, Batmanghelidjh said that giving oral evidence to the PACAC last October had made her feel like she was in the middle of a "mediaeval witch-hunt".

She said that the suggestion by MPs that she had "mesmerised" politicians was "childish" and the reason she had been able to influence the government was that she had a "very robust argument".

She said: "It’s an insult to the Prime Minister and everyone else to say that someone like me can mesmerise them. What are you saying about your Prime Minister, the person running your country?"

On the subject of Alan Yentob, chair of Kids Company, Batmanghelidjh said he was a "very committed man" who worked very hard, attended every trustee meeting and had attempted to solve the charity’s funding problems over the years. "The accusations against him are unjust," she said.

She said the charity had "really robust trustees who were focused on the governance". She said one of them – probably Jane Tyler, a former partner at the law firm Macfarlanes – was a "high-powered partner in a law firm who rigorously looked at our legal due diligence and risk and so on". Another, she said, was Richard Handover, former chair and chief executive of the retailer WHSmith, who carried out a spending review for the Department for Children, Schools and Families in 2009.

"If they thought he was good enough to do that review, he must have been good enough to be running a charity," said Batmanghelidjh of Handover.

She said the trustees had not spoken out to defend themselves because "facts were not what journalists wanted to hear".

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