Charity watchdog launches inquiry into Kids Company over claims of financial wrongdoing

Government charity watchdog launches inquiry into defunct children's charity following 'intense public scrutiny and speculation'

Camila Batmanghelidjh attending a Demos think tank event with David Cameron in 2010 (Getty)

A formal inquiry into the defunct Kids Company has been launched by the Government's charity watchdog.

Kids Company was forced to close earlier this month after funding was withdrawn by a donor. It followed widespread allegations of financial mismanagement and claims it had misspent millions of pounds of donations, including some of the £37m it received from the taxpayer over the last 10 years.

The Commission said it had launched the inquiry "in light of the intense public scrutiny and speculation over the charity's activities and the increasing number of allegations in the public domain about its governance and financial management".

"This is in line with the regulator’s duty to promote public trust and confidence in charities," the third sector watchdog added.

The charity's controversial founder, Camila Batmanghelidjh, has hit back at the widespread allegations against the organisation, claiming it had been the victim of a “trial by media”.

She insisted claims of financial mismanagement were unfounded and condemned David Cameron’s Government for cutting off funds, despite the Cabinet Office taking the controversial decision to overrule their most senior civil servants to award Kids Company a £3m restructuring grant just days before it collapsed.

The Prime Minister has come under pressure for his close links with Kids Company, with claims he was “mesmerised” by Ms Batmanghelidjh.