Bid to disqualify former charity founder and trustees goes to High Court
FORMER charity Kids Company had an “unsustainable business model” and there were warning signs it would fail for at least two years before its “inevitable” collapse, the High Court has heard.
The charity, which supported vulnerable children and young people in London and Bristol until it was wound up in 2015, attracted a number of celebrity backers including former prime minister David Cameron, Coldplay, artist Damien Hirst and comedian Michael McIntyre.
Its closure came shortly after police launched an investigation into allegations of abuse and exploitation at the charity which was dropped seven months later.
Proceedings are now being brought against the founder and ex-chief executive of Kids Company Camila Batmanghelidjh, and seven of its former trustees, including the BBC’s ex-creative director Alan Yentob, who was chairman of the charity.
The Official Receiver argues that all eight are “unfit” to hold company directorships as a result of their handling of the charity, and is asking Mrs Justice Falk to disqualify them, which they are opposing.
It also argues Ms Batmanghelidjh was a “de facto” director of the charity, which she denies.
Ms Batmanghelidjh and the other trustees contend the charity would have survived had it not been for the criminal allegations, which they say made fundraising impossible.
Lawyers said the charity’s trustees approached their responsibilities “very much in the shadow” of its “highly charismatic leader” Ms Batmanghelidjh, who founded Kids Company in 1996.
Lesley Anderson QC, for the Official Receiver, said in written submissions that Ms Batmanghelidjh was the charity’s “public face” and its “demandled” business model, underpinned by a philosophy of “never turning a child in need away”, was her idea.
The barrister said this spending model meant Kids Company “deliberately put the needs of its clients first, along with the spending that entailed, even when it could not afford to do so”.
Her written submissions to the court detailed how the charity had no financial reserves, was sometimes unable to pay freelance staff, became increasingly reliant on Government grants and at times accrued large deficits and unpaid tax bills.
The same day as the charity was notified of the police investigation, it had received a £3 million Government grant to help with restructuring, which Ms Anderson said was largely spent on existing payroll costs.
She said: “From 2013 onwards the warning signs were there that, without intervention, this model would lead the company to fail. Those warning signs gradually increased in frequency and seriousness, and were or ought to have been known to the defendants.”
The Official Receiver is seeking a six-year disqualification for Ms Batmanghelidjh and four years for Mr Yentob.
In a written defence, Ms Batmanghelidjh’s lawyers described the Official Receiver’s case as “extreme, unsupported and unfairly presented”.
Lawyers for Mr Yentob and three other former trustees described Ms Batmanghelidjh as “an inspirational and determined individual” and said the Official Receiver’s criticisms appear “carping and vindictive”.
George Bompas QC said: “Emerging from the mountain of material which (the Official Receiver) is putting before the court is the plain picture of the greatest effort and commitment made by these highly-qualified individuals giving their very best, and at considerable personal sacrifice in time, energy, and expense, for what they believed – with every justification – to be an important cause.”
The case, which began on Monday, is due to be heard over the next nine weeks and Mrs Justice Falk is expected to reserve her ruling.