Kids Company: MPs say 'catalogue of failures' led to collapse
The collapse of the Kids Company charity was a result of an "extraordinary catalogue of failures", a committee of MPs has said.
The Commons Public Administration and Constitutional Affairs Committee (PACAC) also criticised the charity's trustees and the Charity Commission.
Kids Company closed in August after questions over management and finances.
Camila Batmanghelidjh, who founded the charity in 1996, said the report was "a product of bias and rumour".
"The only place we got a rigorous fact-based investigation was with the police," she said, while former trustees condemned the report as inaccurate, unbalanced and irresponsible.
However, Conservative MP Bernard Jenkin, who chairs the committee, told the BBC the committee had been "very careful with this report because we knew it was so controversial".
The inquiry had heard "an extraordinary catalogue of failures of governance and control at every level - trustees, auditors, inspectors, regulators and government", he said.
The committee had heard positive accounts of valuable work by Kids Company, and of "inspired and motivated employees", which made the trustee board's failure to ensure the charity's sustainability "all the more tragic", he said.
But he added that there had been "a litany of allegations of inappropriate 'therapies', lavish spending and abuse of power within the organisation".
The charity supported deprived and vulnerable inner-city children and young people in London, Liverpool and Bristol.
By Lucy Manning, BBC News special correspondent
The report spares no one: Camila Batmanghelidjh, the trustees, government ministers, the auditors and regulators are all criticised.
The heaviest criticism is for the trustees led by the BBC's Alan Yentob.
He's described as someone who condoned excessive spending and lacked proper attention to his duties. The BBC is also accused of poor leadership for failing to take action against him when he tried to make suggestions about the BBC's reporting of Kids Company.
The report also makes clear that even without the police investigation that triggered the charity's collapse, it would have been unlikely to survive due to the trustees' financial negligence and Ms Batmanghelidjh's reluctance to restructure the organisation she founded.
Overall it makes for very sorry reading about a charity doing some good work let down by those who ran it, those who were supposed to oversee it and those who kept funding it without making proper checks.
Mr Yentob and Ms Batmanghelidjh kept insisting there had been no financial mismanagement. This report makes clear there certainly was.
While the committee's report said ultimate responsibility for the charity's closure was on its "negligent" trustees, the government and regulators must also learn lessons from its failure.
It was unacceptable that successive ministers appeared to release funds to the charity "on the basis of little more than their relationship with a charismatic leader, small-scale studies and anecdotes", it said.
The committee says such an approach was an unjustifiable way to conduct government business and to handle public money.
Ms Batmanghelidjh and Kids Company "appeared to captivate some of the most senior political figures in the land, by the force of the chief executive's personality as much as by the spin and profile she generated for the charity", the report added.
The committee also highlighted "extraordinary accounts of luxury items and holidays or spa days being lavished on 'Camila's kids', a favoured group of clients".
Conservative minister Oliver Letwin appeared before the committee in November to explain why he overruled civil service objections to pay a £3m grant to Kids Company just days before it collapsed.
Speaking after the committee's report was issued, he said he believed it was "the right thing to do to give this charity one last chance to restructure".
He said the government would be reviewing its grant-giving process "in light of what we now know about Kids Company".
"By updating the process by which grants are awarded we will make sure the most stable, most effective charities receive taxpayer funds," he said.
Kids Company timeline of events
June 2015: Concerns raised by the Cabinet Office about Kids Company's request for a £3m government grant, but ministers approve the funding
August 2015: Ministers say they want to recover the government grant. The charity closes. Ms Batmanghelidjh tells the BBC that Kids Company was subjected to a "trial by media"
October 2015: Ms Batmanghelidjh and Kids Company chairman Alan Yentob (at the time also a BBC executive) appear before the Commons Public Administration Committee and again deny the charity was badly run. The National Audit Office says the charity received at least £46m of public money despite repeated concerns over its management
January 2016: The Met Police says it has concluded its investigation into allegations against the charity, and concluded there is no evidence of criminality
The report also said the charity's board of trustees ignored repeated warnings about the charity's financial health throughout its 19-year existence.
It also failed to provide robust evidence of the charity's outcomes, or address increasing concerns about its programmes and behaviour of staff, it said.
The trustees' negligent financial management was ultimately responsible for the charity's inability to survive, and its closure left many vulnerable beneficiaries without support, it concluded.
'Profile too limited'
The Metropolitan Police last week announced they had found no evidence of criminality after investigating allegations of physical and sexual abuse at the charity. Kids Company had always denied the claims.
And the PACAC also called on the Charity Commission to raise its profile so as to provide a more visible outlet for people to raise concerns with.
"The commission projects too limited a public profile to provide much reassurance about charities and their regulation, and to attract complaints," the report said.
Camila's Kids Company: The Inside Story will be broadcast on BBC One at 21:00 GMT on Wednesday 3 February, and on BBC Two in Wales.