The Kids Company backer and his £250,000 gift to the Tories ten days before £3m grant to the charity was approved
- Cabinet Office ministers Oliver Letwin and Matthew Hancock ordered taxpayers' money be given to charity on June 29 – weeks before it closed
- Tories accepted £254,000 from James Lupton, who is close to Kids Company boss Camila Batmanghelidjh, on June 19, ten days before move
- Labour have demanded an urgent investigation by Sir Jeremy Heywood
- Mr Lupton, who is thought to be worth £135million, is one of the Tory Party's biggest donors and has been widely tipped for a peerage
Tory ministers overruled civil service advice to approve a £3million grant to Kids Company days after the Conservative Party received a £250,000 donation from one of the charity's key supporters, it can be revealed.
Despite warnings it did not represent value for money, Cabinet Office ministers Oliver Letwin and Matthew Hancock ordered taxpayers' money be given to the troubled charity on June 29 – only weeks before it closed.
The Tories accepted £254,000 from James Lupton, who is close to Kids Company boss Camila Batmanghelidjh, on June 19, ten days before the highly unusual move.
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Despite warnings it did not represent value for money, Cabinet Office ministers Oliver Letwin (left) and Matthew Hancock (right) ordered taxpayers' money be given to the troubled charity on June 29
Labour last night demanded an urgent investigation by Cabinet Secretary Sir Jeremy Heywood into whether the ministers had ignored civil servants after being influenced by a major party donation.
In the months before the decision, the multi-millionaire investment banker went to Whitehall with Miss Batmanghelidjh to discuss a new structure for the charity. There is no suggestion that Mr Lupton made the donation for improper reasons.
As one of the Tory Party's biggest donors – giving more than £2.8million since 2009 – Mr Lupton was also a guest at an exclusive dinner organised by David Cameron that Mr Hancock attended.
Labour Cabinet Office spokesman Jonathan Ashworth said: 'There are unanswered questions over this series of events. Jeremy Heywood should immediately investigate.'
Kids Company received the £3million after the Cabinet Office's top civil servant, Permanent Secretary Richard Heaton, took the highly unusual step of asking for a 'ministerial direction' on whether the payment should go ahead.
The Tories accepted £254,000 from James Lupton, who is close to Kids Company boss Camila Batmanghelidjh, on June 19
In a letter to Oliver Letwin, Chancellor of the Duchy of Lancaster, and Matthew Hancock, minister for the Cabinet Office, on June 26, Mr Heaton wrote: 'It is my judgment that the proposed additional £3million grant does not represent value for money, in terms of delivering the outcomes for which the department is funded by Parliament.'
But on June 29 the two ministers ordered that the money be paid. They replied: 'We have noted your concerns... But equally, we are very mindful of the inspirational work that Kids Company does with young people, for which reason the Government has contributed to it for several years.
'We also take confidence from the changes that Kids Company has undertaken to make in terms of its leadership, management and governance, which we judge do give it a realistic prospect of long-term viability...
'We have therefore decided that the Department should proceed with providing additional funding.' The money was paid into the charity's account on July 30.
A week later, on August 5, Miss Batmanghelidjh announced that Kids Company would close. It is expected that £1.2million of the £3million grant will be lost.
Mr Lupton, who is thought to be worth £135million, is one of the Tory Party's biggest donors and has been widely tipped for a peerage in Mr Cameron's dissolution honours.
He is a member of an exclusive group of donors who enjoy privileged access to the Prime Minister and other senior ministers.
In late 2014 he was listed as a guest at an event attended by Mr Hancock, as well as Mr Cameron and Chancellor George Osborne.
He also donated significant sums to Kids Company. Mr Lupton has denied he was involved in lobbying for the £3million grant but confirmed he had met an Education minister to discuss the charity's finances.
In the months before the decision, the multi-millionaire investment banker went to Whitehall with Miss Batmanghelidjh to discuss a new structure for the charity
In a statement this month, he said: 'My wife and I, accompanied by Camila Batmanghelidjh, met once with the Department for Education in early February 2015. As a donor I was concerned about the long-term financial sustainability of Kids Company.
'This meeting was to explore whether it might have been possible for Government to play a role in creating a new structure for Kids Company... These discussions were not pursued and I have played no further part in the decisions of the past few weeks.'
Mr Lupton did not respond to a request for comment last night. A spokesman for Mr Hancock said that he had never spoken to Mr Lupton about Kids Company and was not aware of his involvement in the charity until after the decision over the grant was made.
The Charity Commission is investigating Kids Company as claims about its management continue to emerge. It has been accused of hugely exaggerating the number of high-risk young people it was helping – claiming to support 16,000 when an investigation has revealed the number may be lower than 500. Yesterday it was revealed that Kids Company spent tens of thousands of pounds helping immigrants to remain in the country and claim benefits.
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