Part of Charity Commission report on collapsed Kids Company was extremely unfair judge says

Part of a Charity Commission report into the collapsed Kids Company was “extremely unfair”, a High Court judge has ruled.

The regulator published a report in 2022 into the management of the charity, which went into liquidation in 2015 following unfounded safeguarding allegations.

Kids Company had supported vulnerable young people in London and Bristol, and counted Coldplay, artist Damien Hirst and former prime minister Lord David Cameron among its famous backers.

The commission’s report said the charity had operated a “high-risk business model” and said there was mismanagement in relation to late payments.

The charity’s former clinical director, Michael-Karim Kerman, brought a legal challenge to have the report declared unlawful at a hearing in March. The Charity Commission defended its claims.

In a judgment on Tuesday, Judge Clive Sheldon said two of the report’s paragraphs were unlawful but dismissed the rest of the challenge.

He said the commission’s observations “give rise to the innuendo that the payments to the ‘top 25’ may not have been justified” – labelling the paragraph “unbalanced and one-sided”.

“This is extremely unfair to the charity and the trustees,” he continued.

Another section of the report implied Kids Company was unable to “weather the storm” as a result of the decision to operate with a low level of reserves, Judge Sheldon said in his 49-page ruling.

He added this was a “clear criticism of the trustees and would be likely to have a materially negative impact on them”.

However, he said the finding of financial mismanagement was “clearly one that was open” to the commission to make. There was “plainly” a basis to describe the charity’s operating model as being high risk, he added.

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Judge Sheldon concluded: “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.”

The legal challenge was started by Kids Company founder Camila Batmanghelidjh before her death in early 2024.

Charity’s former director ‘vindicated’ by decision

A lawyer for Mr Kerman, who continued the challenge, said he felt “vindicated” by the judge’s ruling.

Mr Kerman added: “The iron path to justice has been an arduous struggle for the supporters of Kids Company, in their relentless struggle to imprint the truth.”

The Charity Commission said: “While the court has dismissed the challenge on all but two grounds, and is clear that the overall findings of our report were not ‘irrational’, we acknowledge its finding that we made important errors in relation to two paragraphs of the report and will act to remedy this.”