What do we know about Kids' Company?

The Kids’ Company Organisation

Ms Batmanghelidjh blames Whitehall and the media for having to close amid claims that a potential donor of a further £3m pulled out, after it emerged police were also investigating the charity following allegations that concerns over alleged sex abuse faced by some of the children using the service had not been passed onto police.

The Government has also tried to withdraw the £3m grant meant for the restructuring of the struggling organisation after it emerged £800,000 of the money was being paid out to staff.

Paul Marshall of ARK Schools says he saw “a very charismatic chief executive but with an absence of financial control and basic management alongside her”. He called the lack of management “a fundamental failing of the trustees”. The trustees included ex-WH Smith chief executive Richard Handover, who should surely have known what was required. He has sullied his record.

From 2009 to 2013 the number of staff grew from 231 to 496. By the time it closed, the charity had 650 staff, of whom 140 were full-time ‘key workers’ with a direct counselling and mentoring role.

The charity won a total of £37m in public funding. But it did not build up financial reserves.

Of Kids Company’s £23m budget, £15m went on staff costs in 2013, and £1.5m on food vouchers and cash for children using its services. Senior management also took pay increases over the past few years. In 2009 the employee with the highest salary was paid between £60,000 and £70,000. However, by 2013, the top-paid employee in the charity was receiving between £90,000 and £100,000, while another employee was paid between £70,000 and £80,000.

Two finance directors quit over failure to build up reserves despite funding rising by 75% in five years. Senior directors repeatedly warned trustees of the need to build up financial reserves or face going to the wall and annual accounts repeatedly warned of this problem.

The journalist Miles Goslett says the charity’s statistic of having 36,000 clients was inflated by including parents and school staff. Goslett concluded that it “now acts as a drain on well-meaning donations that might otherwise go to better causes”.

A former employee has claimed teenage girls were groomed for sex by older male clients they met at the charity’s centres, which a girl who once used the organisation said ‘spending money’ given to youngsters was spent on drugs. Ms Batmanghelidjh said on Newsnight she was unaware of these claims (as she says she is unaware of other alleged problems at the charity).

Kids Company employed the expensive global law firm Withers to respond to journalists who didn’t resort to the usual fawning. Not an appropriate use for a charity’s money.

The charity had an office in The City. Why?

Alan Yentob

Alan Yentob had been chairman of trustees for 18 years – far too long. Trustees are supposed to act like Non-Executive Directors. But he obviously was too close to the charity. There should be a maximum term for trustees of five years.

He secretly lobbied Treasury officials over the charity’s unpaid £700,000 employment tax bill. In the end, £589,000 of the debt was written off. Yet he had no concerns about the charity’s finances!

Camila Batmanghelidjh

Her personal background is here.

The Charity Commission has launched a probe into allegations by former Kids Company employees that the charity helped bankroll a place for the teenage daughter of Jeton Cavolli, her personal driver (!), at Dauntsey’s School in Wiltshire. The school’s chairman of governors, Richard Handover, is also the vice-chairman of Kids Company’s board of trustees. A source who until recently worked at the charity said:

I can confirm that Ms Cavolli was registered as a client at Kids Company, and that Kids Company funds were spent supporting her while she was at school.

It is understood that the amount paid was a five-figure sum.

Mr Cavolli, 46, known as ‘Tony’, has been on the charity’s payroll for nearly two decades. He is believed to have been paid about £40,000 a year. Another ex-employee said:

I don’t think Tony was paid to do anything other than drive Camila’s car. She can’t drive and she never took public transport because she didn’t like to walk long distances.

The investigation was triggered last month after employees met the Commission to set out their concerns about whether the arrangement represented proper use of the charity’s money. Demonstrators marched from Camberwell to Downing Street. Ms Batmanghelidjh arrived in a black cab to offer words of thanks and support to the crowd.

Miss Batmanghelidjh said she needed several personal assistants because she has to dictate all her written communication:

I have very severe learning difficulties so I can’t use a computer and so I have to dictate everything. Consequently because I am working from around eight in the morning to about 11 or 12 at night, the PAs have to rotate. When I fundraise I write each letter personally – or I sign it personally, so everything I have to dictate. The reason I have several PAs is that, first, they share the morning and evening slots and, second, one of them has to be a clinical PA because I work therapeutically with children. Because fundraising is so difficult I also have to do a bit of work on a Saturday and a Sunday so the PAs share the Saturday and the Sunday slot as well.

Where else, we may ask, could someone with severe learning difficulties have a £90,000 salary and the services of a personal driver?

The government

Downing Street had been warned by civil servants and ministers before this year’s general election that funds designated for Kids Company would be better spent on other children’s charities, but were overruled by No 10. David Cameron has defended the move to offer Kids Company a £3m rescue package after the election, saying that it was right to give it “one last chance” – showing a cavalier and dictatorial disregard for taxpayers’ money.

The Education Department had wanted to stop public funding, but were overruled by No. 10. Downing Street should not be making decisions about individual donations. Phil Frampton, of the White Flowers Campaign Group, an umbrella organisation for abuse survivors’ groups, said there was real resentment from other groups at the perceived special treatment towards Kids Company by successive governments.

Oliver Letwin expects that the Public Accounts Committee will carry out a wider inquiry into Kids Company.

The Labour party

Harriet Harman wrote to the Chancellor George Osborne last month urging him to provide a cash lifeline to save the charity after financial problems came to light.

Now Labour’s hapless Lucy Powell (she organised Ed Miliband’s election campaign) says this was the wrong thing to do. She said the National Audit Office should investigate why the Government continued to support the charity when it was in financial difficulty!

Well, that’s going to happen anyway.

The Charities Commission

Despite the unfavourable publicity, the regulator seems to have been looking the other way until very recently. Repeated warnings in accounts about the lack of reserves appear to have gone unnoticed.

So who comes out of this well?

Nobody. It suggests that state sector couldn’t organise a piss-up in a brewery.