The closure of Broken Rainbow, which was Britain's only national LGBT domestic abuse organisation, is to be investigated by the National Audit Office (NAO) after BuzzFeed News revealed allegations that taxpayers' money had been misspent at the Home Office-funded charity.
The announcement comes after the chair of a Commons select committee wrote to both the NAO and the Home Office “requesting that they investigate” why the department continued to fund Broken Rainbow right up until its collapse in June.
The NAO said its investigation would seek to "establish the facts around the collapse of Broken Rainbow, including the financial management of the charity, Home Office oversight and the clarity of grant agreements, and the role of the Charity Commission and other public sector bodies".
It will report its conclusions in spring 2017 – less than a year after BuzzFeed News revealed a catalogue of allegations concerning the governance and financial mismanagement of Broken Rainbow. The charity's collapse drew repeated comparisons to the now defunct Kids Company, which also received government money right up to its closure, in August 2015.
In July, following the BuzzFeed News investigation, Bernard Jenkin, chair of the Commons public administration and constitutional affairs committee (PACAC), wrote to Mark Sedwill, permanent secretary at the Home Office, and Sir Amyas Morse, comptroller and auditor general, with a series of questions about this “new Kids Company”.
That exposé, based on hundreds of internal documents leaked by a whistleblower, revealed endemic profligacy, with the charity’s own treasurer warning trustees that “restricted funds” had been “misspent” in ways that could comprise “illegal activity”. Yet the Home Office carried on providing six-figure sums annually over several years.
The files, which comprised expense claims, emails, texts, and letters from creditors as well as accounts, detailed how the charity spent money on routine first-class travel by the chief executive (including £800 train tickets), lavish gifts, computers, and catered lunches for staff. It also showed that grants from the Home Office and Comic Relief were spent within 24 hours of landing in the charity's bank account, often on running costs such as office IT and expense.
In a statement at the time, the charity's board of trustees said an investigation into its operation was "both warranted and necessary". It added: “We are confident that at the conclusion of the investigation it will be shown that the Board of Trustees have not been negligent in their duties.”
In his letter to the Home Office, Jenkin wrote: “We would like the Home Office to provide us with a timetable of your engagement with Broken Rainbow, both noting funding decisions and any due diligence work. In particular, we would be interested in hearing about
• What assessment the Home Office had made of the use of government grants by the Charity
• Why the Home Office failed to discover the issues reported in the BuzzFeed article
• What the 2014 audit, referred to in the BuzzFeed article, examined and what it identified
• What assessment the Home Office made of the solvency of the charity during 2015 and 2016 and how that affected grants to the charity
• Whether the Home Office will attempt to recover any of the money granted to Broken Rainbow
• What contingency plans the Home Office put in place to support clients of Broken Rainbow.”
In his letter to Morse at the NAO, Jenkin said the allegations of financial mismanagement were "concerning" and asked him “to look at what arrangements the Home Office made and should have made to control this expenditure”. Noting the NAO's work on Kids Company, Jenkin also asked it to look at “how far the lessons you and we identified for the public sector of the Kids Company episode have been absorbed; and whether the Home Office had any contingency plans (as you recommended to departments your paper on Provider Failure last year, a point we echoed in our report on Kids Company earlier this year)".
Jenkin also wrote to Damien Collins, chair of the culture, media, and sport committee – which has now taken over responsibility for oversight of charities – highlighting lessons PACAC learned during the Kids Company scandal and alerting him of the allegations surrounding Broken Rainbow.
“We wrote to the Home Office seeking their view of what happened regarding the charity," Jenkin told Collins. "We have also written to the National Audit Office requesting that they investigate these allegations. You may wish to take on this work in the future.”
In a separate intervention in the Commons last week, Hannah Bardell MP told Justine Greening, education secretary and minister for women and equalities: "The secretary of state may be aware of the closure of the only UK lesbian, gay, bisexual and transgender [domestic abuse] charity, Broken Rainbow. ... Sadly, this very much mirrored what happened to Kids Company, with the closure being reported by Patrick Strudwick of BuzzFeed.
"Will she work with me, him, and others who are interested in this to put pressure on the public administration and constitutional affairs committee and the Charity Commission to have a full review of this and make sure that LGBT people in this country have access to domestic abuse support?"
Greening replied that she would happily discuss the situation with Bardell and that the specific issue is "of concern". Bardell told BuzzFeed News she was writing to Greening to arrange a meeting with the minister.
BuzzFeed News has contacted the Home Office for a response to Jenkin’s letters.
Following the publication of this story, a Home Office spokesperson told BuzzFeed News: “We are determined to ensure that every victim of domestic violence and abuse has somewhere to turn. The national helpline for lesbian, gay, bisexual and transgender (LGBT) victims is now operated by leading LGBT anti-violence and hate charity Galop.”
The spokesperson added: "As part of the grant agreement with Broken Rainbow, they were required to provide quarterly monitoring reports. Broken Rainbow demonstrated delivery of the helpline throughout the period of the grant, including managing an increase in calls, which was evidenced in the reports. The Home Office was satisfied that the fund was used for the purpose as set out in the grant agreement. In May 2014, we expressed concerns about some elements of the charity’s governance. These concerns were successfully addressed through changes to their governance."