LGBT charity collapsed over 'chaotic' management after £1.4m grants - watchdog

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A domestic violence charity that received £1.4 million of taxpayers' cash collapsed after "chaotic" management, according to a public spending watchdog.

Broken Rainbow, which supported lesbian, gay, bisexual and transgender abuse victims, had been surviving "hand to mouth" for years, the National Audit Office said.

It found that over 15 months, a third of payments from the charity's bank account went to its chief executive office Jo Harvey Barringer, including money for her wife, who also worked at the organisation.

The charity collapsed in June last year amid claims of lavish spending on first-class travel, flowers and iPads.

But the watchdog said it had been "unable to establish a complete picture" of finances over the final year as records were deleted remotely shortly after the liquidators seized its computers.

"There is disagreement between the trustees and former CEO about who was responsible for this," the NAO report said.

Broken Rainbow had been "spending much more than its income" for some time, with increasing amounts of money going on consultancy, research, campaigns and staff costs.

Its emergency reserves shrank by 97% in just two years, from £80,083 in 2012 to £2,307 in 2014, despite its income rising by 52%.

In its final year, it had less than £500 in its bank account on most days and more than half of each government grant to cover the upcoming three months was gone within 24 hours, according to the report.

Most of its cash came from the Home Office, which had handed over £1.4 million since the organisation was founded in 2004.

The NAO drew comparisons with discredited charity Kids Company, which collapsed amid a storm of controversy over how it had been run.

Broken Rainbow adopted a similar approach to lobbying for government funding in its final days, telling the press it was "broke" and on the brink of closure.

On March 1 last year, Companies House issued a public notice threatening to close Broken Rainbow within three months, but on April 7, the Home Office give it a quarterly payment of £30,000.

The NAO report states: "The management of Broken Rainbow was chaotic and did not comply with regulatory requirements over a number of years.

"Many different parts of government had some information about Broken Rainbow's difficulties, but none had the complete picture."

Ms Harvey Barringer signed off payments from the charity's accounts alone in the final months before it went into liquidation, despite two signatures usually being required.

While the CEO was a consultant managing director, she was involved in the recruitment process to find a successor. But she was eventually appointed to the post at a salary 27% higher than advertised and which allowed for a further 15% bonus, according to the report. 

Ms Harvey Barringer said payments while CEO totalling £114,397 between April 2015 and July last year, which amounted to 32% of payments from the charity's bank account, covered her hourly fee in a previous role as managing director, her £57,500 salary and other expenses, including wages for a member of staff.

It also included salary payments for her wife, who worked at Broken Rainbow, which Ms Harvey Barringer's records showed amount to £12,000.

"The former CEO told us that she had a verbal agreement with the charity's treasurer to claim money including a backdated salary increase from August to December 2015, although the treasurer in place in August 2015 had left by October 2015 so was not in a position to authorise this in December," the NAO report said.

"She also told us that her expenses were authorised by the treasurer. We have been told, both by the former CEO and trustees, that there were lengthy periods where there was no treasurer in place, and none of the trustees we have spoken to recall authorising expense payments to the CEO's account."

An external investigator ruled allegations of bullying against the CEO were unfounded, but raised concerns about the "blurring of professional lines and lack of effective management within the charity".

In May last year, the CEO was dismissed by the board of trustees for gross misconduct in relation to several allegations about her conduct while in post.