Government moves to ban Kids Company directors over 2015 collapse

The founder and former trustees of Kids Company face being banned from serving as company directors after the charity collapsed in 2015 amid allegations of serious financial mismanagement.

Sky News has learnt that the Government's Insolvency Service has written to lawyers acting for Kids Company's former board members - who include Alan Yentob, the ex-BBC creative director, and Richard Handover, a former boss of WH Smith (LSE: SMWH.L - news) - to warn them that it is minded to pursue disqualification proceedings against them.

The move is also thought to include Camila Batmanghelidjh, Kids Company's flamboyant but controversial founder, who ran the charity on a £90,000 annual salary and vehemently defended its governance even as it lurched towards bankruptcy.

The Insolvency Service, which has powers to seek bans on directorships for individuals of up to 15 years, refused to comment on Monday.

Kids Company's failure in the summer of 2015 was a major embarrassment to David Cameron, the then Prime Minister, who had backed a £3m Government grant to the charity little more than a month before its demise.

He had said that the valuable work undertaken by Kids Company meant it was worth giving it "one more go", and was so moved by Ms Batmanghelidjh's work that she was awarded a CBE while Mr Cameron was PM.

The charity claimed to support 36,000 children and young adults, working with those who were struggling with mental health issues after being involved in gun and gang crime, or who were suffering from neglect.

In total, it received £42m of public money over a 15-year period - although some media reports have put that figure at as much as £50m.

It eventually closed its doors, though, after the Metropolitan Police launched an investigation into allegations of abuse at the charity.

A damning report by MPs (BSE: MPSLTD.BO - news) in February 2016 outlined an "extraordinary catalogue of failures", with its board of trustees reliant on "wishful thinking and false optimism".

The Commons public administration committee said trustees had ignored repeated warnings from auditors about Kids Company's financial position.

It also accused senior politicians of being in thrall to Ms Batmanghelidjh.

The Insolvency Service, which is part of the Department for Business, Energy and Industrial Strategy, is required to investigate company insolvencies, although its reports are never published.

Its letter to former Kids Company trustees is said to have been met with a request from some of the recipients for further time to prepare formal responses outlining why they do not believe a ban on serving as company directors would be justified.

That additional time is due to expire in the coming days, according to a source close to one of the trustees.

Formal disqualification proceedings can be both lengthy and complicated, and the length of any bans being sought by the Insolvency Service was unclear.

If they did result in the banning of Mr Yentob and his former colleagues from serving as company directors, it would represent a huge blow to the reputation of one of Britain's best known media figures.

Mr Yentob chaired Kids Company for 12 years, but stepped down from his BBC role four months after the charity's collapse, saying his continued service was "proving a serious distraction" to the Corporation.

He had been accused of editorial interference after criticising BBC journalists' coverage of Kids Company's financial problems.

Companies House filings show that he is a director of a company called I Am Curious, a television production business he established last year.

His fellow trustees included Richard Handover, a former chief executive, then chairman, of the high street retailer WH Smith.

Two of his children were reported in 2015 to have been on Kids Company's payroll.

Other directors included Andrew Webster, a former executive at the drugs company AstraZeneca (NYSE: AZN - news) , and Erica Bolton, an arts publicist.

In July 2015, Kids Company announced that heavyweight City figures including Stuart Roden, the chairman of prominent London hedge fund Lansdowne Partners, would be joining its board of trustees.

Mr Roden, who was among the major donors to Kids Company, did not take up that position before its collapse, however.

The full list of those who have been warned that they face potential disqualification proceedings could not be obtained on Monday.

Mr Yentob said he could not comment on Monday when contacted by Sky News.

None of the other former trustees could be reached for comment.

A separate review by the Charity Commission into Kids Company is reported to be ongoing.