03/07/2015 07:06 BST | Updated 03/07/2015 11:59 BST

Camila Batmanghelidjh To Step Down From Kids Company Amid 'Ugly Games' Scandal

The high-profile founder of Kids Company is to step down amid allegations of mismanagement.

But Camila Batmanghelidjh says complaints against the charity are intended to distract from the failure of the Government to properly care for vulnerable children.

The campaigner has denied Kids Company is badly run and told the BBC Radio 4 Today programme she had always planned to leave her high profile role as chief executive next year.

However she said the allegations were a “red herring” aimed to divert attention from the Government’s own shortcomings.

Camila Batmanghelidjh founded Kids Company nearly 20 years ago

And she said she "prayed to God" the briefings were not coming from David Cameron's office, as she had worked closely with the Prime Minister.

Kids Company will now cut staff and appoint a new chief executive with Batmanghelidjh to take up a new advocacy and clinical role once her replacement has been appointed.

A joint investigation by the BBC's Newsnight and Buzzfeed said the Government was withholding a £3 million grant until the charity was reorganised.

She said: "We have been debating with Government and having a challenging discussion because Kids Company is taking care of far too many mentally ill children and children who are not being protected robustly.

"Our discussions with Government has been a charity cannot carry this load and they have been sometimes uncomfortable discussions, which has made the Government understandably, potentially, uncomfortable with the message.

Batmanghelidjh says she has enjoyed a close relationship with Prime Minister David Cameron

"We have had audits in the last 19 years, all of them have been clear. We have raised £150 million worth of money where we have had to process and report on it. We have had London School of Economics evaluate Kids Company in term of its management and functioning, and in terms of its value for money - those reports indicate we are running at a rate of very high excellence."

Batmanghelidjh said: "My interest is to make sure the children are OK. But what I am trying to explain is these arguments are being put out to avoid the real discussion which is there are large numbers of children who are unprotected in this country and who are not receiving appropriate help.

"What I am trying to explain is since the Blair government we have received repeated government funding - if we were so dysfunctional and we were not reporting and accounting for things, why have several governments given us money?

"This argument has emerged recently because Government is not facing its responsibilities robustly."

Batmanghelidjh said three directors at the charity left earlier this year because of funding uncertainties, not because of problems in the way the charity managed and reported its spending.

She added: "As a founder, I think it is very important to step down and hand an organisation over to other people to run it.

"I was always planning to do that in the 20th year, which would have been next year. That was always my plan, we were going to appoint a chief executive to take over my role, because I think that's the right thing to do.

"I want to do clinical work - but that is not the point. We are having an argument about something that is a red herring. This is briefing to avoid the real issues.

"I have to believe and hope this is not from David Cameron's office. It so happens the type of briefing they are now delivering is one in which they are attempting to discredit me so my message is weakened."

Batmanghelidjh challenged Government officials to bring forward a list of problems if there were genuine concerns about her running of Kids Company.

Of the Prime Minister, she added: "I pray to God it is not coming from David Cameron and his team, I still have to have faith he wants to do the right thing by children."

The charity was founded by Batmanghelidjh in 1996 and provides support to vulnerable inner-city children, young people and families.

The BBC said the charity's latest accounts show it relies on the Government for £4 million of its £20 million funding. Newsnight reported that, in order to meet the Government's funding ultimatum, officials have suggested Batmanghelidjh should take the non-executive position of "president".

Cameron, who has shared a platform with Batmanghelidjh in the past, has previously defended the charity's funding against efforts by ministers and officials in the Cabinet Office and Department for Education to cut it or intervene, the programme said.

Officials indicate that Justice Secretary Michael Gove and Chancellor of the Duchy of Lancaster Oliver Letwin have supported a tougher approach to the charity.

On Friday the Prime Minister's official spokeswoman said: "The Government's priority is to do what it can to make sure every child has the best start in life. As part of that the Cabinet Office have been working to continue to support Kids Company during the difficult situation that they face.

"They have requested changes to their management structure which is in the best interests of the charity."

When asked if No.10 had been briefing against the charity in recent days, she replied: "No, that's not true."

On whether Cameron had personally prevented earlier tougher action against the charity earlier this year, she said: "I'm not going to get into the details of the decision."

And when asked if Cameron was still an 'admirer' of Ms Batmangelidjh, she said only: "He's clear that Kids Company has a role to play."

Batmanghelidjh told The Guardian: “Some ugly games are being played. The facts are that the vulnerable children of this country remain largely unprotected. There’s no point in shooting the messenger if the message is uncomfortable. I am being silenced.”

The development is the latest blow to hit the charity. In March, Kids Company's interim finance director, head of human resources and director of development all resigned amid claims of concerns about its funding and "high levels of stress within the workplace", the Sunday Times said.