The Insolvency Service has been accused of launching a “witch trial” to discredit Camila Batmanghelidjh, the former chief executive of Kids Company.
Her lawyers suggested she had been singled out over the directors of other high profile failures such as Woolworths and Bank of Scotland because she had embarrassed the government.
The Insolvency Service is seeking to disqualify the eight trustees of Kids Company from acting as company directors. It is also pursuing Batmanghelidjh, arguing she was a de factor director of the collapsed south London children’s charity, even though she was not a trustee.
Reports this week suggest that the former trustees, represented by charity law firm Bates Wells Braithwaite, may be near to agreeing voluntary disqualification as directors.
But Batmanghelidjh is being represented separately. She has now received funding to pay for her case from an anonymous benefactor, and is represented separately by law firm Gunnercooke. She has vowed to spend the next two years fighting the action.
'The Insolvency Service has decided to make maximum publicity'
Gunnercooke said in a statement that this was the highest profile action since the Company Directors Disqualification Act had come into force in 1986.
“Of all the directors of all the companies that have collapsed since 1986 – Lehmans, Woolworths, BHS, Bank of Scotland, Railtrack – the Insolvency Service has decided to make maximum publicity out of seeking to disqualify the well-meaning and generally competent trustees of an amazing charity,” the law firm said.
““If ever there were a modern-day witch trial then this is it.”
The statement said that Batmanghelidjh was fighting the case because she believed she was being unfairly treated.
“Ms Batmanghelidjh was neither a trustee nor a director of Kids Company and has no need or intention to be a director of a company in the future,” the statement said. “She is contesting this case because the thousands of children who placed their trust in Kids Company should know that their trust was honoured and the charity did nothing but fight for their care.
“As a matter of principle, she also wishes to challenge a government system that seeks to silence those who advocate for the vulnerable.
“The case against Ms Batmanghelidjh will fail, but by the time that happens she will have spent years under the cloud of suspicion and she will be hampered from continuing to help destitute children.
“Every accusation against her will be refuted or shown to be so trivial that it is contemptuous of a department of state to raise it. For example she is accused of creating an ‘unsustainable business model’ when it is an irrefutable fact that Kids Company ran successfully for 19 years.”
The law firm said it would ensure scrutiny of the roles of David Cameron, then the prime minister, and other senior ministers and civil servants, during the company's collapse.
It also accused the government of using its resources to prevent a fair trial.
“Huge government resource has been poured into this case,” the statement said. “It has become an exercise in swamping our resources, with thousands of documents produced, many of them irrelevant.
“In August 2017, 17,000 pages of bank statements were sent by the Insolvency Service to us and they were followed on 8th September by 54 lever arch files, containing approximately 27,000 pages of documents.
“The case highlights how inappropriate the company structure is for charities and how inappropriate it is to apply the normal rules of company law and conduct to the charitable sector.”
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