Former staff speak up over restaurant spending but KidsCan says it has now adopted no-alcohol policy.
The KidsCan charity for children living in poverty spent donors' money on "champagne lunches" and taxis to and from restaurants, say former staff.
They say hospitality spending was a feature of discontent among workers, along with some salaries being counted in ways that made KidsCan's administration budget appear lower.
The claims follow a not guilty verdict for former staff member Sharlene Jones, who was accused of stealing from the charity. Her lawyer, Guyon Foley, told the trial of spending concerns and of a "vendetta" against her - a claim strongly denied by KidsCan chief executive Julie Chapman and the charity's board.
The spending concerns, also voiced to the Herald, related to a period from 2009 through to mid-2012 when KidsCan was courting celebrities. It hosted footballer David Beckham and Hollywood star Karl Urban, in a bid to win big donations from the wealthy at swanky charity events.
KidsCan is one of the country's most high-profile charities and is the chosen cause of the current affairs show Campbell Live. Accounts for the charity show revenue went from $160,000 in 2005 to $7 million in 2013 in its campaign to provide lunches, raincoats and shoes to schools in low-income areas.
The claims against the charity spilled out of its two-year campaign to have Mrs Jones prosecuted.
Former staff told the Weekend Herald their concerns included the charity paying for meals at expensive central Auckland restaurants and taxis to and from the venues.
Mrs Jones said: "I think it got to the stage where it was expected KidsCan would pay. If you were going out with your own money, would you shout that table wine?"
In a statement last night, KidsCan confirmed money had been spent on alcohol and "hospitality".
It said the charity had originally tried to raise money through celebrities and events. Some money was used for "hospitality as this was needed when you are working with celebrities and sponsors in this type of fundraising".
"Mrs Chapman acknowledges that when she identified the organisation was growing to the limits of her expertise and experience, mistakes were starting to happen."
She sought out new board members to "assist her to handle the growth and work and to ensure the right systems were put in place".
The new board had concerns about the "hospitality spend" and moved the fundraising model away from celebrities and event management. In late 2013, a "no alcohol" policy was introduced.
The charity also confirmed taxis were put on for staff, saying it was a "contribution" for those attending events outside their normal duties.
It said the KidsCan board backed the police decision to prosecute but "respects the court's decision and considers the matter now closed".
The statement also said money raised through the In Our Own Backyard scheme had been ring-fenced and was spent on shoes, socks, raincoats and food for specific children over a school year. The charity now supported 100,000 children in 485 schools, it said.
Mrs Jones resigned from KidsCan in the months following an August 2012 memo to staff in which Mrs Chapman said "negativity" at the charity would be considered a "performance issue". Two months later, an email from Mrs Chapman to Mrs Jones and two other staff said "negative behaviour in the workplace ... could result in disciplinary action".
The day after Mrs Jones left in November 2012, a review of the KidsCan payroll found she had received a double-payment five months earlier. The charity paid KPMG $30,000 for an audit, which identified $24,786 in possible overpayments to Mrs Jones, with the bulk of that linked to a dispute over how much she should be paid. On that claim, KPMG found evidence supporting both her and the charity.
The double payment of $6384 was the only clear case in which money was wrongly received. Mrs Jones had maintained the payment was accidental and offered to repay the money.
Mrs Chapman lodged a theft complaint with a superintendent at police headquarters in Wellington. In emails to police afterwards, she quoted the senior officer's apparent interest in the case. The officer has told the Weekend Herald she has no recollection of the conversation.
After nine months, Constable Greg Thomsen was assigned to investigate the case. Documents show Mrs Chapman offered to hire a private investigator to assist police - an offer which was rejected - and passed on information gathered by her husband's observation of Mrs Jones' home early one morning.
A transcript of the trial shows Mr Thomsen confirming no formal interviews were done with complainants or witnesses before the charges were laid. He also said he had not taken any notes in his police notebook about the case and had produced job sheets related to the investigation only after the trial had started.
A spokesman for police HQ said Mr Thomsen was supervised throughout the inquiry by a "very experienced detective sergeant". The case was later reviewed by a detective inspector and found to have been managed to an "appropriate" level. The spokesman said HQ had exerted no influence on the investigation.
The trial also heard how Mrs Chapman visited Mrs Jones' new employer to tell him she had stolen $30,000 and milk from the charity's fridge.
The original story stated Shania Twain supported Kidscan NZ. She has her own charity of the same name.