Police have said they will investigate a scandal-hit race relations charity.

In recent weeks, the All Wales Ethnic Minority Association (Awema) has been dogged by allegations of financial mismanagement following the publication of two highly critical reports.

It is claimed chairman Naz Malik had used Awema’s funds in “an inappropriate way” by using them to pay off credit card debts of more than £9,000 as well as giving himself and his daughter unauthorised pay increases.

Mr Malik and finance director Saquib Zia were sacked earlier this month, and Awema’s public funding was withdrawn by the Welsh Government.

Administrators were called in to wind up the organisation’s affairs.

Now it has emerged that a Welsh Government and Big Lottery Fund report into the spending of £8.4 million in public funding has been passed to the police.

Detective Inspector Dave Runnalls, of South Wales Police economic crime unit, said: “I can confirm we are investigating allegations of dishonesty by Awema personnel.”

Awema’s main role was to promote equality across Wales by distributing funds to ethnic minority projects.

Following a damning report from its own trustees, auditors in a Welsh Government inquiry said they had found a “complete lack of oversight of the financial processes and controls” at the Swansea-based charity.

They said funds had been used to pay for gym memberships for staff worth £2,120, rugby and cricket tickets totalling £800, and a £110 parking fine.

The report also said there was a “clear conflict of interest” because one of the charity’s directors reporting to Mr Malik was his daughter Tegwen.

There were “considerable increases” in her salary from £20,469 to £50,052, it alleged.

This came following an earlier report which said Mr Malik had used funds “inappropriately” and paid off credit card debts worth £9,340.

It was also alleged his salary was increased to £65,719 without approval from the board.

The Welsh Government has said it will try to protect as much public money as possible in the accounts of Awema.

However, opposition parties have demanded answers after it emerged ministers had been given warnings about Awema in 2002, 2004 and 2007, yet funding was still given to it.

Plaid Cymru AM Bethan Jenkins said: “I welcome the news that police are investigating allegations of dishonesty at Awema.”

Welsh Liberal Democrat AM Peter Black told reporters, during a press conference this morning, that there remained many unanswered questions.

”If it turns out that a minister has failed to act on clear warnings, then that minister will have to account for that,” he added.

”If a minister has been found to be negligent and failed to do their duty, and the public has lost some substantial sums of money, I think they are duty bound to resign. Whether they will is a different matter.

”The problem is if you follow the line from 2004 to 2011, there are four or five ministers. Which one are you going to pin it on?”

A statement on the Awema website, published on February 17 by its chairwoman Rita Austin, said that an administrator would be appointed to take control of the charity’s business.

”The Awema board is resolved to provide a proper duty of care towards our staff as Awema moves towards closure, and is taking all necessary steps to do so,” she wrote.

Dr Austin also confirmed the Awema board had decided to “summarily dismiss with immediate effect the chief executive officer and the finance director”.