Kids Company, Corporate Governance and Conflicts of Interest

KidsCompany

Alan Yentob, Chairman of failed charity Kids Company, cut a pathetic figure on prime-time television last week, scuttling into a coffee shop to avoid having to answer questions from the press – exactly what not to do as the Chairman of a board of trustees.

The role of Chairman is often misunderstood, particularly by those occupying the position but it is during a crisis that they should really come to the fore, becoming the public face of the organisation and taking the heat off the Chief Executive, to allow them to focus on running the business.

It is not as if the charity’s problems have come as a surprise to the trustees – an audit commissioned by the Cabinet Office last year said that cashflow problems were a “key financial risk” which meant that “it is not possible to build reserves and invest in new activities and locations”.

Other clear warnings of looming insolvency included an inability to make PAYE payments to HMRC on a number of occasions and most recently non-payment of staff wages.

So what should the trustees have done?

As soon as problems arose in terms of not being able to pay staff, suppliers or to meet tax liabilities, the board should have called in an insolvency practitioner to check that they were being reasonable in continuing to operate the charity. They should have instigated a full investigation into the charity’s finances and should have reviewed and modified, where necessary, the financial controls, policies and procedures.

Only if they were then satisfied that the charity was a ‘going concern’ should the trustees have allowed the charity to continue to operate.

Instead, they have relied upon the continuing support of leading politicians to provide government funding for an organisation that has clearly been unsustainable for a number of years.

Which brings us back to the Chairman, Alan Yentob, who is also Creative Director of the BBC. Rather than spending time working with the board and the Chief Executive to prepare a clear statement for the media as to what was going on, he apparently tried to suppress the BBC’s news-coverage and influence its treatment of  Kids Company Chief Executive Camila Batmanghelidjh in a Radio 4 interview – a clear conflict of interest.

One Response to Kids Company, Corporate Governance and Conflicts of Interest

  1. […] Kids Company, corporate governance and conflicts of interest David Doughty  […]

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