How we revealed bad investments by Comic Relief - and the comedy establishment turned against us

When our Panorama investigation into British charities finally made it to air this week, its revelations about Comic Relief’s investments triggered a huge amount of public anger. The result helped break one of the great taboos in British life – that you can’t criticise charities or you will be responsible for the deaths of children.

When we started looking at Comic Relief’s finances this year we were astonished to see that the charity, which is sitting on a cash pile worthy of a FTSE 100 company, was holding millions of pounds of investments in alcohol, arms and tobacco. We were alerted by a member of the public, the irrepressible Andrew Goodwill, who had been pursuing this for several years (much of the information was sitting in the charity’s 2009 accounts).

The story had been passed over by a dozen or more news desks who told Goodwill they would not attack such a loved British institution. In 2009 the News of the World wrote up the story but it was apparently spiked – the rumour in the newsroom being that the Freud/Murdoch nexus was to blame (the charity’s co-founder is Emma Freud, whose brother Matthew is married to Rupert Murdoch’s daughter Elisabeth).

Why did it take another four years for the story to come out? I think the media has been scared to criticise these organisations as they do good work and command public trust. This has, in my view, allowed some of the big charities to see themselves as beyond criticism.

This was apparent when the Panorama team first asked questions of Comic Relief back in September. Keeping within BBC editorial guidelines we sent the charity a list of questions about its investments. We wanted to know which managed funds it was using to invest its publicly donated money. Comic Relief had changed the way it presented its accounts since 2009, so we couldn’t see where it had invested its assets. We thought this was a reasonable thing to ask, particularly as Comic Relief claimed it believes in transparency on its website.

In response they refused to say where the money was and instead hired lawyers at Harbottle & Lewis, who deluged us with legal threats for the best part of three months. Their case was, as I understand it, that airing criticisms of Comic Relief would put people off donating, that their aims are so broad as to make investing in a way that avoids conflicts needlessly restrictive, and that it would be too time-consuming to list their portfolio (astonishing for an organisation that is sitting on a quarter of a billion pounds of public donations).

Given the close connection between the BBC and Comic Relief (they share several senior figures) there was much muttering from on high about the legitimacy of the investigation. But Tom Giles, our editor, forced the show on air and, after much legal wrangling, we were eventually given a transmission date. Comic Relief kept up the legal threats until the very end, and the day before broadcast they ran pieces in The Times and The Guardian stating that the law compelled them to hold shares in a portfolio that brought the biggest returns (even though the Charities Commission has said this is not the case).

On the day of transmission all hell broke loose. We were desperately trying to finish the film, but could see that the overwhelming public reaction was outrage over what the charity had done with its money. It is not hard to see the inherent contradiction in Comic Relief raising money to fight alcohol abuse, and then investing that money in shares in a company that sells alcohol. Emma Freud valiantly tried to defend its position, tweeting at donors that it merely invested in blue-chip funds, in the same way that the BBC’s pension fund is managed.

This argument is full of flaws – pensions are purely profit vehicles, there is no ethical conflict given that the BBC pension fund hasn’t campaigned against alcohol abuse, and the BBC pension fund is fully transparent. Angry donors asked Ms Freud which managed funds Comic Relief had invested its money in and she refused to answer. She agreed with a tweet that Panorama would have blood on its hands for harming donations (though she has since deleted her reply).

Kevin Cahill, Comic Relief’s chief executive, stumbled unprepared on to World at One on Radio 4 to try to defend the indefensible. He started by saying (rightly) that his investments were lawful. He then tried to blame the regulator, saying that the Charities Commission needed to give better advice on ethical investments. Then he revealed how that very morning he might have had a Damascene moment and learned that ethical investments could match and even outstrip normal stocks.

I was pretty baffled by this claim, given that we had pointed this out to Comic Relief in several legal letters in our marathon correspondence. Mr Cahill eventually said the charity would review its investments, though as yet we have had no details on who will conduct the review, what form it will take and whether it will be published.

Despite Mr Cahill acknowledging the criticism, Lenny Henry promptly issued a statement claiming: “Attacking Comic Relief takes desperately needed support from children".

I got into a bizarre twitter spat with the Comic Relief trustee and investment guru Duncan Bannatyne (whom we doorstepped in the film), who tried to argue that supermarkets sold tobacco, so investing in tobacco manufacturers was equivalent to investing in supermarkets. When I pointed out that Comic Relief doesn’t campaign against supermarkets but does fund TB programmes, he told me I was “content to damage needy kids in Africa”.

Emma Freud, Lenny Henry and Duncan Bannatyne seemed to regard Comic Relief as above criticism because it does good things. Its climbdown should remind other worthy charities that they must listen to the people who generously hand over their hard-earned cash on trust. That trust must be repaid on demand.

War of Words: Chris Atkins' Twitter exchanges

Chris Atkins and Duncan Bannatyne exchanged tweets on Tuesday after "Panorama" was screened

Duncan Bannatyne

@scatkins Ah, but supermarkets sell cigarettes, thus funding cigarette companies, so how do you justify that please?

Chris Atkins

@DuncanBannatyne Not an ethical contradiction with Comic Relief’s aims. Don’t think public would be disgusted with it.

Duncan Bannatyne

@scatkins It is the same contradiction. You back companies that sell cigarettes.

Chris Atkins

@DuncanBannatyne Simple test – what would alienate donors? Tobacco companies yes, supermarkets probably not. If in doubt ask the public.

Duncan Bannatyne

@scatkins So, to you ethical is what alienates donors. Nothing more nothing less. You are very sad.

Chris Atkins

@DuncanBannatyne In this context ethical investing for charities is about alienating donors. You shd really read Charity Commission guidance.

Duncan Bannatyne

@scatkins I am going to block you in 2 minutes because you are a bully who is content to damage needy kids in Africa.