Police are investigating an ethnic minority charity in Swansea after it went into liquidation.
The Welsh government said it had suspended funding for the Minority Ethnic Women’s Network, which went into liquidation this month.
The charity received £480,000 of European funding to provide projects aimed at supporting black and ethnic minority people to become more integrated with their communities.
The Welsh government said it had suspended funding to the organisation "as a result of an ongoing police inquiry relating to the organisation".
A spokeswoman for South Wales Police said: "South Wales Police are conducting an investigation into the business activity of MEWN and will be consulting the Crown Prosecution Service in relation to its findings."
A letter sent yesterday to Welsh assembly members by Jeff Cuthbert, the Welsh government’s minister for communities and tackling poverty, informed them of the decision to suspend funding and said the charity had been delivering a number of European Social Fund projects.
He did not set out the reasons for the decision to suspend funding or for the police investigation, but said: "There is currently no evidence that any Welsh government or European funding has not been used for the purposes it was awarded."
A spokesman for the Welsh government said it was aware of the police investigation and "was taking proportionate measures to protect the interests of beneficiaries, the organisations concerned and public funds. It would be inappropriate to make any further comment while the investigation is ongoing."
The charity, which is understood to have employed about 20 people, did not respond to a request for comment before publication of this story.