Camila Batmanghelidjh, chief executive of defunct charity Kids Company, and its chair Alan Yentob, faced widespread accusations of mismanagement during a three-hour hearing into the closure of their charity.

Kids Company collapsed in July after running out of funds. It faced widespread accusations of financial mismanagement, and was also subject to a Metropolitan Police inquiry into sexual abuse.

Batmanghelidjh and Yentob appeared before the Public Administration and Constitutional Affairs Committee this morning to answer questions about their management of more than £30m of government funds, handed out to Kids Company over the course of its 19-year existence.

During the three-hour session #kidscompany was the number-one trending topic on Twitter, with Batmanghelidjh and Yentob attracting widespread condemnation from members of the public. MPs repeatedly accused Batmanghelidjh of failing to adequately answer questions, with Paul Flynn, Labour MP for Newport West, accusing her of using a “spiel of psychobabble” and "verbal ectoplasm" to avoid giving answers, and chair Bernard Jenkin, Conservative MP for Harwich, telling her at one stage to “stop talking”.

The committee questioned whether the charity kept proper records, and asked why it claimed to have 36,000 beneficiaries but only handed over 1,700 records to statutory services at the point of its closure.

It also questioned why so much money was distributed to individual beneficiaries. Batmanghelidjh admitted during the session that the charity sometimes provided hundreds of pounds of week in funding to beneficiaries and in one case paid a beneficiary’s mortgage. She admitted that £73,000 was spent on one beneficiary but said cash “wasn’t handed to him”. She did admit that cash was handed out in small packages to beneficiaries.

The committee also questioned extensively the failure of the charity to build up reserves, saying that it had received a huge amount of funding but “there was always something more important” than building financial sustainability.

MPs also questioned whether the charity had been subject to the proper inspection regimes. Batmanghelidjh admitted that the charity had never had a full Ofsted investigation, although aspects of its operations had been inspected by Ofsted. She was unable to provide details of the most recent inspection.

Batmanghelidjh and Yentob were also questioned over the use of an emergency government grant. The Cabinet Office had offered a £3m emergency restricting grant and made the removal of Batmanghelidjh and Yentob a requirement of further funding. A third of the money was spent on meeting the payroll of the charity, in contravention of the terms of the grant agreement.

Jenkin questioned a warning issued by the charity immediately before its closure that south London would descend into looting and savagery as a result of it shutting down. He said that he had received evidence from statutory sources that what violence there had been was because several Kids Company beneficiaries had used the money to pay for drugs, and could no longer afford to pay their “pushers”.

MPs also questioned whether Yentob, who is creative director of the BBC, attempted to use his position in the corporation to influence investigations into his charity. Yentob admitted that he had been too closely involved at some stages.

Batmanghelidjh told the committee that the charity’s closure was not down to mismanagement but because it had faced accusations of sexual abuse which had caused some funders to withdraw money.

She said she had put up her own flat as surety to cover Office for Civil Society funding.

Batmanghelidjh also repeatedly questioned why MPs felt the need to conduct an investigation and ask some questions, and responded strongly to accusations that she was refusing to answer questions.

“On what basis have you decided that Kids Company is a failing charity?” she said.

“Because it’s gone bust,” Jenkin responded.

Batmanghelidjh said that “some civil servants have behaved maliciously and in a way not becoming of democracy and I shall produce evidence”.

Batmanghedlijh said that the leaking of documents to the press was indicative of a collapsing democracy.

“I have incredible reservations over the type of briefing going around through government and the media,” she said. “This type of action puts the democracy of this country under pressure.”

Yentob also made repeated references to the support that the charity had from government, in particular the Prime Minister David Cameron, the Secretary of State for Health Jeremy Hunt, and the-then minister for civil society Nick Hurd.

She also questioned why the committee had refused to take more than 40 letters from staff as evidence, and was told that this was because she had supplied them herself.

Yentob repeatedly asserted that the charity had been subject to audit, and that this had never been qualified, as proof that it had been well run. However he admitted that the charity had made mistakes. He said the charity should have restructured earlier and that he should have stepped down earlier as chair. He said he regretted several of the decisions he had made and conceded he should not have been “in the room” during an investigation by the Today programme.

“If it was intimidating I regret it,” he said.

A joint investigation by Newsnight and Buzzfeed that was broadcast last night said the Charity Commission and the government were warned about mismanagement at Kids Company as early as 2002.

Additional reporting from Kirsty Weakley and Alice Sharman.