A watchdog report into Kids Company, the children’s charity set up by the lateCamila Batmanghelidjh, was “irrational”, “unfair” and “one-sided” in key criticisms it made of the way the charity was managed, a court has ruled.
Nevertheless, although the Charity Commission admitted it made errors and would have to rewrite parts of its inquiry report,published in 2022, the judge refused to quash it, and upheld other criticisms the watchdog made of Kids Company.
Although both sides said the ruling vindicated their positions, a separate ruling on costs by the judge, Mr Justice Sheldon, said: “In substantive terms, it seems to me that there was no overall winner or loser in this case.”
Alex Goodman KC, the lead counsel for the supporters ofKids Company, who brought the legal challenge, said:“We are hugely relieved and pleased with this judgment, which provides long-overdue vindication for Kids Company. This robust decision addresses fundamental wrongs and restores fairness and accuracy to the narrative.”
The Charity Commission insisted the ruling had largely vindicated its inquiry report, saying: “Today’s high court judgment has upheld our finding of mismanagement of the charity’s finances and has confirmed that it was based on ‘ample evidence’.”
Kids Company was one of the UK’s best-known charities when itcollapsedin 2015 afterunfounded media reportsof abuse. It had been praised for its pioneering work in London, providing practical, emotional and educational support for thousands of severely traumatised children caught up in poverty and gang violence.
Batmanghelidjh, itscharismatic founder, subsequently endured years of political and media vilification before beingdramatically exoneratedin a high court ruling in 2021 that praised her achievements and paid tribute to the charity’s trustees.
The Charity Commission’s inquiry report into the collapse of Kids Company published a year later caused surprise when it delivered a formal finding of “mismanagement in the administration of the charity”, triggering the legal challenge by Batmanghelidgh that led to Tuesday’s ruling.
Lawyers for Kids Company, whose former clinical director Michael-Karim Kerman continued the challenge on behalf of Batmanghelidjh afterher death in 2024, argued the commission’s report was vague and superficial, ignored positive findings of the previous year’s high court ruling, and “perpetuated stigma” around the charity.
Sheldon ruled the commission’s criticism of Kids Company’s management of payments to children in its care amounted to “innuendo” and was “extremely unfair”. He also concluded that a separate criticism of Kids Company’s trustees’ running of the charity was “irrational”.
Sheldon said: “Although the commission has a discretion as to what to include in the report of a statutory inquiry, that discretion must be exercised lawfully. Creating such extreme unfairness would not be lawful: in public law terms, it is irrational.”
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But he upheld the commission’s conclusions on other aspects of the management of the charity, including its handling of client records, claims it made about the number of beneficiaries it supported, and its handling of a payroll issue. He rejected allegations the commission had predetermined the outcome of its inquiry.
He said: “I do not consider that the report, looked at as a whole, was irrational. The fact that the report contains errors, and even a small number of irrational findings or observations, does not mean that the overall document is irrational.”
Kerman said he would continue to “carry on the fight for justice for all those who have been stigmatised by the untruthful narrative [about Kids Company] created by the media and the actions of various government bodies since the charity’s closure”.
He said: “Since Kids Company’s traumatic closure in August 2015 there has been a concerted attempt to denounce unfairly the charity and all who were touched by it, whether in the capacity of staff, volunteer, supporter or one of the thousands of vulnerable young children and families the charity served for nearly 20 years.”