Kids Company: Camila Batmanghelidjh lashes out at 'ill-spirited ministers' as she announces the organisation is about to go bankrupt

The founder of the children’s charity Kids Company lashed out yesterday at “rumour-mongering civil servants” and “ill-spirited ministers” as it was announced that the organisation she founded 19 years ago was about to go bankrupt.

Camila Batmanghelidjh broke down as she accused the Government of putting a “nail” in the organisation on the back of a “range of rumours” about the charity. Kids Company has been accused of overstating the number of children it supports at its 10 centres in London and Bristol as well as failing properly to account for millions of pounds in government grants it was given to pay for its work.

Last Thursday it emerged that the Metropolitan Police’s Sexual Offences Unit was also investigating the charity over “a number of allegations of crime” involving Kids Company between 2008 and 2012.

The Independent understands that the announcement of the police investigation led several large donors to inform the charity that they would be withdrawing their support.

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As a result a rescue package for the charity, including a £3m grant given to Kids Company by ministers against civil servants’ advice, was no longer enough to ensure the charity could survive.

A decision was then taken to close the organisation down immediately and put the charity in the hands of liquidators.

Kids Company said it had been “forced to close as a result of the fact that it is unable to pay its debts as they fall due”.

Its closure is likely to result in hundreds of job losses and leave several thousand vulnerable children without support.

Government sources said local social services would take over responsibility for those children cared for by the charity while experts would go to its offices to “safeguard” files on individual children. They admitted that there was little chance of recovering the £3m government grant which was paid to the charity only last week.

The handing over of the grant is now likely to be subject to an inquiry by the National Audit Office and the Public Accounts Committee. That could potentially embarrass David Cameron.

A former government special adviser claimed that concerns about the charity had been ignored by the Prime Minister for several years, who insisted that funding be continued against official advice.

Dominic Cummings, who worked for Michael Gove in the Department for Education, said Downing Street had repeatedly overruled civil servants’ submissions.

“We went through it all with Michael [Gove] who made the decision they would get no more money,” he said. “[Then] she [Ms Batmanghelidjh] wrote to Cameron. Cameron’s office then told our Private Office that the Prime Minister personally ordered that the money be paid. He was worried about the media.”

Among concerns about Kids Company were claims that it overstated the number of children it helped. Ms Batmanghelidjh blamed the Government for the closure as well as media reporting of the allegations against the charity. “Unfortunately the charity has closed and we’ve had to abandon a lot of children,” she said.

“That’s the end of Kids Company and actually a bunch of rumour-mongering civil servants, ill-spirited ministers and the media, on the back of a range of rumours, put the nail in this organisation. There has been a very concerted campaign to discredit me as an individual and the organisation.

“The catastrophic abandonment of children who are suffering is a testimony to our collective moral failing.”

Esther Keller, director of services for Kids Company in Bristol, said she felt anger at Westminster and concern for the children who would lose out on support. “I feel terrible sadness for the children and young people we have been working with for the past three years in Bristol,” she said.

A government spokesperson said: “The Government has supported Kids Company over the last seven years to help it deliver services for vulnerable young people and so we are disappointed it has been unable to move to a sustainable financial position. The welfare of these young people continues to be our primary concern and we are now working closely with local authorities to make sure they have access to the services they require.”

There are likely to be two separate inquiries into why government ministers continued to pump millions of pounds into the Kids Company charity when their own officials advised them that the funding could not be justified.

In June, the most senior civil servant in the Cabinet Office, Richard Heaton, took the rare step of asking for a “ministerial direction” – effectively ordering him to hand over a £3m restructuring grant to Kids Company. This was signed by Cabinet Office ministers Oliver Letwin and Matthew Hancock, who will now have to justify their decision.

The inquiries – most likely by the National Audit Office and the Public Administration Committee – will also want to establish whether Downing Street itself intervened to insist that the funding be maintained. It has been claimed that David Cameron was so “mesmerised” by the Kids Company’s founder, Camila Batmanghelidjh, that it was he who ultimately took the decision.