Former chair of the All Wales Ethnic Minority Association (Awema) Dr Rita Austin accused AMs of "strident, ill-informed and prejudicial interventions at a time when they should have been quiet".
She was giving evidence to the the Public Accounts Committee on 3 December 2012 as part of its enquiry into the way the government awards grants.
While she accepted that there were serious problems with Awema, describing herself as being "appalled at the state of affairs" she had found, she nevertheless claimed that the organisation should have been given the opportunity to turn itself around.
She also claimed never to have alleged that officials had a racist motivation for wanting to investigate Awema, and that the BBC had had misquoted her and had later taken the quote attributed to her down from the website.
The quote in question first appeared on Awema's website and the original story can still be viewed on the BBC
, which includes her claim that attacks on Awema were a "time honoured way of debasing and devaluing" black and ethnic minority people.
by the Wales Audit Office released on 18 October 2012 found that government officials had failed to heed warnings about the way the company was run.
Awema was wound up in February after revelations of
within the company.
Also giving evidence to the committee were Welsh government Permanent Secretary Derek Jones alongside four other government officials.
Mr Jones told the committee that the report into what happened with Awema "makes you wince to read it, as Accounting Officer".
He also said that plans are in place to introduce stricter checking procedures for bodies that receive government funding.
This will include ensuring that the chief executive or the chief accounting officer of an organisation is held to account.
John Rose from the Big Lottery Fund was also present.
He said that the Big Lottery Fund is responsible for distributing 40% of the money raised for good causes through the National Lottery, and that 90% of the money distributed in Wales is given to the third sector.
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