Kids Company founder cleared to challenge critical watchdog report in court

The founder of the former children’s charity Kids Company, Camila Batmanghelidjh, has won permission to go to the high court to try to overturn a charities watchdog report she claims was unbalanced, unfair and unlawful.

Batmanghelidjh had vowed to mount a legal challenge to the Charity Commission’s inquiry report on the high-profile 2015 collapse of Kids Company when it was finally published in February, calling it a “travesty” and a “rewriting of history”.

The report – which made a formal finding of “mismanagement in the administration of the charity” against Kids Company’s board and management – came a year after a judge comprehensively exonerated Batmanghelidjh and the trustees of mismanaging the charity after a three-and-a-half year legal case.

Batmanghelidjh argued in her submission to the high court that the commission’s inquiry report unfairly ignored many of the judge’s conclusions, was overreliant on partial evidence, and reflected a determination on the part of the watchdog to produce an account that was critical of Kids Company.

In his ruling, Justice Bourne said he had concluded that Batmanghelidjh had an arguable case. “That does not mean that the claimant will not face high hurdles,” he said. “Some findings in the report are statements of uncontroversial fact, many of the comments at least could be interpreted as anodyne and the court will not readily interfere with a decision by an expert regulator.

“It is nevertheless arguable that the report, read as a whole, makes or implies (or can be read as making or implying) several adverse findings about the charity’s governance, especially in respect of decisions about the allocation of benefits to clients. If the report is so interpreted, the grounds of challenge to it are arguable.”

Batmanghelidjh said in a statement: “I am pleased that the court case will be heard in full. I urge the Charity Commission to be full and frank in its disclosure to the court.”

A Charity Commission spokesperson said it would robustly defend the claim. It argued it was not bound by the findings of the 2021 high court ruling, and rejected Batmanghelidjh’s claim that its own conclusions were unbalanced and irrational.

The prospect of a judicial review next year is the latest in a long-running saga after what was once one of the UK’s best-known children’s charities collapsed amid unfounded sex abuse allegations, followed by a vicious media and political campaign against Batmanghelidjh, the charity’s former trustees and staff.

Until it closed in 2015 Kids Company provided practical, emotional and educational support for severely traumatised children experiencing poverty, violence and neglect, with high-profile supporters including JK Rowling, Coldplay and David Cameron.

In 2017 the official receiver brought a case against Batmanghelidjh, then Kids Company’s chief executive, and its trustees, arguing in more than 18,000 pages of evidence that the charity had been guilty of negligence, lax financial controls, pursuing a reckless business model and exaggerating the number of children it served.

The case, brought at a cost to taxpayers of £9.5m, was thrown out by a high court judge, who instead praised Batmanghelidjh and the trustees as “a group of highly impressive and dedicated individuals”. It said the charity would have survived had wrongful media claims of sex abuse not destroyed its ability to fundraise.

Despite the court’s findings, the commission pushed ahead with its inquiry. It highlighted what it called Kids Company’s “high-risk business model”, and criticised its oversight of some items of spending on child beneficiaries. But it also concluded there was no basis for regulatory action against Batmanghelidjh or the trustees, and confirmed there was “no dishonesty, bad faith, or inappropriate gain in the operation of the charity”.