The Hepatitis Foundation has called in the auditors as it pushes back against an investigation's highly critical findings of extravagant spending.
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The foundation has been put on notice with a threat of being referred to the Attorney-General if the chairperson and trustees don't resign by Monday.
The charity's founder triggered a two-year investigation after laying a complaint with the regulator, which then kept the details of the report secret for more than a year.
The Hepatitis Foundation spent more than $128,000 on travel for its board chair Chris Cunningham in just over two years and paid for lavish dinners at top Auckland restaurants.
It also could not account for thousands of dollars of credit card expenses and set up a separate trust fund where surplus funding was deposited.
Charities Services - the regulator - responded by sending the foundation a letter of expectation. It rejected the investigator's recommendation to publish the report on its website saying it only did so after a charity failed to remedy the matters of concern, and the foundation had "remedied the issues identified by the investigation".
Mr Cunningham and the trustees all remain on the board.
Board responds
On Friday, the Hepatitis Foundation said in a statement that it was "fully committed to its patients and continues to support them despite inaccurate claims of financial mismanagement.
"The outcome of a two-year Charities Services investigation into the foundation following these claims was released this week. This report contains many inaccuracies and has long been contested by the foundation. The board is disappointed to see it released given Charities Services was aware of these inaccuracies.
"Consequently the Board has engaged a senior firm of accountants to review the findings of the DIA investigator report in relation to management expenditure.
The board supports its Chair, Chris Cunningham, and strongly refutes many of the claims made in the report, including that travel undertaken on behalf of the Foundation was unapproved, unreported or inappropriate."
Board on notice
The man who set up the foundation, Sandy Milne, said enough was enough and if the board could not see they needed to move on then he would find a way to get rid of them.
"That was once a great foundation, they have let us down and let the patients down and the taxpayers down, we have all been wronged," he said.
Mr Milne has written to Mr Cunningham saying he has until Monday to resign or he'll bring in the Attorney-General.
He's put the rest of the board on notice as well for failing to keep the chairperson in line.
"Hepatitis Foundation has been hijacked by people who have forgotten the patients. I sent them an email today inviting them all to resign as a block," he said.
But a spokesperson for the foundation said the board fully supported Mr Cunningham and they were bringing in the auditors to "review inaccuracies in the report".
Mr Milne said he could not believe the response.
"I am ashamed of them, I know them, I know half of them, some of them are doctors with formally good reputations," he said.
Dr Michael Gousmett is a charity taxation specialist and has worked in the sector for 30 years.
"I don't think Charities Services have done the sector any good at all. To me, it's a bit like a slap on the hand with a wet bus ticket with what's come out of this to be honest - sending them a letter of expectation saying we expect you to do this."
Dr Gousmett said the regulator seemed to be confused about whether its role was to police charities or be a friend to them.
He said it was game over for the Hepatitis Foundation.
"Believe me, public trust in that foundation, sadly, has now been lost," he said.
As for the lavish dinners, business class flights and unaccounted expenses - Dr Gousmett said the judgement from the board had been way off.
"Would the donor be happy with me spending $4000 that I can't account for? The answer to that surely must be no," he said.
"If I'm travelling business class, how would a donor feel about that? Is that an appropriate use given that I'm representing this charity?
"To me the answer is no even if it is a long haul flight, for me you buckle down and travel cattle class - that's the way it is."
He said he too wanted Mr Cunningham to step down and was encouraging Mr Milne to follow through with the Attorney-General.
The foundation is still refusing to front for interviews and while Mr Cunningham had been approached, he was also not responding to RNZ's requests.
The regulator is also refusing interviews but in a statement said the outcome in this case reflected that the foundation responded appropriately and promptly to remedy the issues uncovered in the report.
The foundation said it was currently engaging with various agencies, the regulator said it was not one of them.
However, the Ministry of Health said in a statement it was in communication with the Hepatitis Foundation and was continuing to work with them.