The prospect of losing funding from state and local Liberal governments has cowed the Mardi Gras board into silence about the conduct of a former employee who misused almost $14,000 of charity funds on personal expenses.
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Liberal candidate for Sydney lord mayor Christine Forster confirmed her campaign manager Mitchell Price resigned on Thursday, two days after Fairfax Media revealed the young Liberal used a corporate credit card to purchase $13,800 of personal expenses while employed by the Sydney Gay and Lesbian Mardi Gras.
But according to leaked communications obtained by Fairfax Media, the executive board of Mardi Gras has been engaged in tense discussions about whether to dispute Mr Price's claim that his conduct was the result of an innocent "error".
When Fairfax Media provided written questions to Mr Price on Monday, he said he had "mistakenly" linked the company's corporate credit card to accounts on his computer while employed by the charity from November 2013 to April 2015. As a result, he spent almost $14,000 on personal hire-car travel and social media and Facebook advertising.
"Once I became aware of the error I was mortified, immediately apologised and paid all the money back," Mr Price said in a written response.
But the leaked board discussions reveal the company regarded Mr Price's actions as "theft or fraud" and had sought legal advice about their obligation to publicly contest his account.
One board member proposed the board make no comment because the organisation's reliance on funding from the council could be jeopardised if the September 10 election delivered more power to the Liberals.
"If that happens, the Liberals will likely control both the State and the Council and what is currently a difficult funding environment could get worse," the board member wrote.
In 2015, the City of Sydney increased its annual sponsorship of Mardi Gras to $1.5 million over three years.
Two board members, who spoke to Fairfax Media on the condition of anonymity, confirmed the fear of losing sponsorship from both local and state government had guided the board's decision to remain silent.
One board member also recalled having a conversation with Mr Price in early 2015 where Mr Price made it clear "he had not accidentally taken the money".
The leaked communications also disputed Mr Price's claim that he reached a "mutual separation agreement" with the company, with an extract of his dismissal letter indicating his employment with the organisation was terminated.
The organisation referred the matter to the NSW police, but no charges were laid. Mr Price's lawyer negotiated a repayment plan and Mr Price repaid the money by June 2015.
The fallout between Mr Price and the Mardi Gras organisation has seen key players in Liberal party's inner-city faction rally around the 26-year-old. Mr Price was represented in his negotiations with Mardi Gras by Michael Tiyce, also the president of the East Sydney Liberal branch.
In April 2015, the same month his employment with Mardi Gras ended, Mr Price was hired by Coogee MP Bruce Notley-Smith as an adviser, and promoted to senior adviser in May 2015.
In statements to Fairfax Media earlier this week, both Mr Notley-Smith and Cr Forster said they accepted Mr Price's version of events.
"Mitchell is a kind and genuine person who I've known for a number of years through his charity work and community engagement," Cr Forster said.
In response to a further series of questions on Thursday, Mr Price rejected the board's characterisation of his conduct as fraud, but said he had decided to step aside from Cr Forster's campaign.
"I stand by my earlier comments," he said in a written statement.
"I don't wish for my personal matter to overshadow the fact that the City of Sydney needs change, which is why I will no longer be volunteering for Christine Forster's campaign."
The Mardi Gras board did not respond to a request for public comment.
