Prince Harry's Children's Charity Under Fire

Prince Harry's Children's Charity Under Fire
Prince Harry
Jeff Overs/AP

03/26/2008 AT 06:30 PM EDT

After his return from combat in Afghanistan, Prince Harry has been enjoying the some African sun with girlfriend Chelsy Davy – but he's taking heat of a different kind in the nearby country of Lesotho.

There, in 2006, with the tiny kingdom's Prince Seeiso, Harry founded a charity called Sentebale to help orphans. But Sentebale's newly released financial records show that for the first 17 months there were $2.2 million in donations – with just 7.5 per cent going directly to children in need.

The charity spent nearly $1 million on start-up costs and pricey vehicles, plus $180,000 on the CEO's salary and private schooling for his children abroad. "Where's The Money for Orphans, Harry?" queried one British newspaper headline.

Harry's courtiers counter that the funds were spent on hiring "first-class staff," and that significantly more money will soon flow to Lesotho's orphans. "The last thing Prince Harry wanted was for the charity to distribute money fast without proper safeguards," says a Palace source.

Co-founder Prince Seeiso also tells PEOPLE, "We told ourselves we would not dish out money willy-nilly unless the structures are in place. Every dollar sent to an institution should be accounted for."

Good Start

When Harry, 23, first visited the Mants'ase Children's Home in 2004, young orphan Mutsu Potsane clasped the royal hand and refused to let go. It was a moving moment and in a later documentary Harry vowed he would have an ongoing charitable nature: "This is a lifetime commitment for me."

So far, Mants'ase Children's Home has only received $20,000. It would have received more, according to sources, were it not for various concerns.

"There has been an issue with the quality of the management," says a palace source, adding that Sentebale's CEO has "joined the board of Mants'ase to help sort it out, so that we know our funds will be spent well and accountably."

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