A salutary lesson will have been provided to both charities and those considering the use of company secretarial services by the report released by MPs in early February on the circumstances that led to the collapse of the charity Kids Company.
Kids Company’s closure in August followed controversy over the management and finances of the charity founded by Camila Batmanghelidjh in 1996. Now, the Commons Public Administration and Constitutional Affairs Committee (PACAC) has released the results of its inquiry, describing the charity’s collapse as the result of an “extraordinary catalogue of errors”.
There was criticism in the report for all of the major parties involved in the scandal, including government ministers, auditors, regulators, trustees and Batmanghelidjh herself, who described the report as “a product of bias and rumour… the only place we got a rigorous fact-based investigation was with the police.”
However, Conservative MP and committee chair Bernard Jenkin insisted to the BBC that the committee had taken great care with the report “because we knew it was so controversial”. He added that the inquiry had heard “an extraordinary catalogue of failures of governance and control at every level – trustees, auditors, inspectors, regulators and government.”
Jenkin continued that the failure of the trustee board to keep the charity sustainable was made “all the more tragic” by the positive accounts of valuable work done by the charity and of “inspired and motivated employees” that were also heard by the committee.
He added: “There has been a litany of allegations of inappropriate ‘therapies’, lavish spending and abuse of power within the organisation, and we hope that this episode highlights to all trustees that protecting the reputation of an organisation is a core element of good governance.”
Receiving particular censure in the report is former Kids Company trustee and former BBC Creative Director Alan Yentob, who was accused of condoning excessive spending and paying insufficient attention to his duties. The BBC also came under fire over its failure to take action against Yentob when he tried to make suggestions about how the corporation was reporting on Kids Company.
The report also found that even if the police had not conducted the investigation into the charity that prompted its closure, the trustees’ financial negligence and the reluctance on Batmanghelidjh’s part to restructure the organisation meant it was unlikely to have survived.
The picture painted by the committee’s findings is a sorry one of a charity that performed good work, but was ultimately brought down by the failures of those whose job it is to run and oversee it. It is a story that many of those presently contemplating getting in touch with company formation agents like those of London Registrars should learn from to ensure that their own organisation benefits from only the highest standard of governance.