Colourful: Kids Company founder Camila Batmanghelidjh, who has denied any wrongdoing, but a minister claims she would send begging letters to the Prime Minister who would pay up

Kids Company boss Camila Batmanghelidjh sent a 'Dear David' letter begging him to give the bankrupt charity more cash, an ex-minister said today.

Former minister for children Tim Loughton said he was worried about a very 'sizeable' grant to the charity in 2012 but was 'over-ruled' after Miss Batmanghelidjh went to the 'mesmerised' Prime Minister.

Ministers handed £46million of public money to Kids Company in spite of at least six warnings about the dire state of its finances, a damning report has found.

Five government departments doled out millions in grants to keep the now-defunct charity afloat over a period of 13 years, the National Audit Office said.

Miss Batmanghelidjh has today rubbished the report and called it 'distorted'.

She said her charity offered 'exceptional' value and was given taxpayers' money to 'do the job the Government couldn't do', adding: 'It wasn't doing the charity a favour'.

Mr Loughton said Kids Company, which shut down this year, was given it 'special treatment' without providing evidence of its effectiveness.

He said: 'Camila Batmanghelidjh assured us it was doing a fantastic job, but we never saw the proof. When you are handling such large quantities of public money you really do need to show that it's effective, value for money and sustainable. It wasn't and that's why I cautioned against giving further funds on this scale.'

He added: 'What particularly annoyed me when it was taken out of our hands and the money was paid over ... if there were many other youth charities doing some really important work who effectively were squeezed out because there wasn't enough money to go round'.

Downing Street said today ministers from 'successive governments' had believed it was the 'right thing to do to support this charity'.

But it refused to comment on claims that the Prime Minister had received a 'Dear David letter' from Ms Batmanghelidjh after Mr Loughton raised concerns about awarding the charity more funding.

Asked if Mr Cameron had expressed a view about the grants being awarded in 2012, a No 10 spokesman said: 'I'm not aware of him doing so.'

Pressed to flatly deny that Downing Street had been involved in decisions about funding for the charity, he said: 'I don't recognise it.'

The spokesman also said he did not recognise descriptions of Mr Cameron being 'mesmerised' by Ms Batmanghelidjh.

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Working relationship: Prime Minister David Cameron (right) has been accused of allowing himself to be 'mesmerised' by Miss Batmanghelidjh (left) because he felt she embodied his Big Society agenda

Officials first raised concerns about its management in 2002, saying other charities offered 'better value for money'.

And they 'repeatedly' warned ministers in the years that followed that the charity was being kept alive by government cash alone.

Yet ministers continued to dispense grants, even overruling a senior Cabinet Office civil servant and handing over another £3million just before Kids Company finally collapsed in August.

Warning: Tim Loughton said he raised concerns over funding to Kids Company who just went over his head to the PM

The money was paid on July 30, the same day officials learned that the Metropolitan Police was investigating the charity over allegations of physical and sexual abuse.

Meg Hillier, a Labour MP and chairman of the Public Accounts Committee, said it was 'unbelievable' that such sums had been handed over to the charity 'with little focus on what it was actually achieving'.

The report is a damning indictment of the Government's handling of Kids Company, which was run by founder Camila Batmanghelidjh and chairman Alan Yentob, the BBC's £330,000-a-year creative director.

David Cameron has been accused of allowing himself to be 'mesmerised' by Miss Batmanghelidjh because he felt she embodied his Big Society agenda.

Former Tory children's minister Tim Loughton said today that Miss Batmanghelidjh would bypass ministers with 'Dear David' letters begging for more money and the Prime Minister would agree, he said.

He said she 'went over our heads' and 'I was very sceptical at the time and was very against giving them such a large amount of money'.

Kid Company also adopted a 'bully strategy' to get money warning that children would be left destitute, it was said.

The NAO says that the charity 'followed a consistent pattern of behaviour that we observed in 2002, 2005, 2007, 2010, 2012 and 2015, each time Kids Company approached the end of a grant term... Kids Company [would] lobby the government for a new funding commitment.'

It added: 'If officials resisted, the charity would write to ministers expressing fears of redundancies and the impact of service closures.

'Around the same time, Kids Company would express the same concerns in the media.

'Ministers [would] ask officials to review options for funding Kids Company. Officials would award grants to Kids Company.'

It has also emerged that a whistleblower quit the charity after just four months in 2005 and wrote to trustees including Alan Yentob and senior civil servants claiming cash was just being handed to children.

The report says he 'highlighted concerns to DfE and Kids Company's trustees about Kids Company's senior management structure and governance and about some of the individuals receiving cash payments from the charity'.

Senior government officials will now be hauled in front of the PAC to face questions over the scandal.

Richard Heaton, former permanent secretary of the Cabinet Office and Chris Wormald, permanent secretary of the Department for Education – which gave Kids Company more money than any other department – will be grilled by MPs on Monday.

Collapsed charity: Kids Company was run by Miss Batmanghelidjh and chairman Alan Yentob (above), the BBC's £330,000-a-year creative director

Meanwhile the Public Administration and Constitutional Affairs Committee, which has already questioned Mr Yentob and Miss Batmanghelidjh, will summon Cabinet Office chief Oliver Letwin.

They are likely to face questions about who gave the orders to override advice from officials and issue Kids Company with more money despite its apparent precariousness.

In particular, they will be asked which minister ordered the final £3million of funds to be released this summer.

The 40-page NAO report found that officials warned 13 years ago that Kids Company's cash flow was poor and that public money would go further with other charities.

Department for Education officials also said that government funds would be at risk if the charity failed, as it was close to doing, and that the charity 'was not well regarded at a local level'.

The NAO disclosed that Kids Company used the same recipe to request money from the Government on six occasions since 2002 – and that ministers gave in every time.

Firstly Kids Company would lobby government and air concerns to the press; ministers would then ask officials to review funding options; and finally officials would then award grants.

In 2013, the Department for Education refused Kids Company funding but was requested by the Government's accounting officer to prepare a 'public interest case' to keep funding in place, 'despite its failure to win grants through the competitive process'.

Among the reasons given, the department argued that it was necessary to keep on funding Kids Company 'on the basis of the reputational damage to the Government's wider agenda (which would have an impact on delivery) if it withdrew funding'.

According to the NAO report, Kids Company was also treated as a special case.

Most charities have to compete for government funding but, astonishingly, officials often asked Kids Company to produce their own 'self-assessment' reports to see if the money was being spent wisely.

Since Kids Company's collapse, there have been a string of damning allegations painting a picture of financial chaos at the charity.

Earlier this month, Miss Batmanghelidjh was lambasted for dishing out more than £70,000 to a single individual.