The UK government is to stop giving money to Development Aid from People to People or DAPP charity in Malawi following a BBC investigation which found it was under the control of a cult-like group.
Dapp, which runs education and health projects in the African country, has received millions of pounds in the last decade from the UK, EU and Unicef.
The Department for International Development has spent almost £6million funding the DAPP in Malawi. British officials have suspended funding and launched an investigation.
DAPP has links to the controversial Teachers Group, which has been investigated by the FBI and whose leader is wanted by Interpol over fraud allegations.
The BBC found that part of the funding it received found its way to the Teachers Group, with some Dapp staff handing over as much as 30% of their monthly salary to the group.
Founded in the 1970s, for years the Teachers Group has run a government-funded alternative school system, but in 2001 the Danish authorities raided its offices and charged its founder Mogens Amdi Petersen with fraud.
Found not guilty in 2006, he and some of his associates immediately left the country, but prosecutors appealed and the group are now wanted by Interpol.
It is thought they may have taken refuge in a massive luxury compound, worth an estimated £20m, on the Pacific coast in Mexico.
A spokeswoman for DFID said: “DFID has a zero tolerance approach to fraud and corruption – full stop. Payments to DAPP have been suspended and we encourage the BBC to share their evidence in full.”
A spokesperson from DAPP Malawi said: “Over the past 21 years, DAPP Malawi’s work has reached nearly 3 million people in Malawi, and at no time has donor funding ever been used for purposes other than those intended and agreed with donors.”