Originally Posted by BBCA community project co-ordinator suspended from the scheme says contracts awarded to members of her family were justified.
Miriam Beard defended hiring her brother, the UK ju jitsu champ, to give £40,615 training in the sport at Plas Madoc Communities First in Wrexham.
A Wales Audit Office report has found serious financial mismanagement.
But Ms Beard said the auditors' findings did not fully reflect the work of a "committed and dedicated team".
The report said the financial mismanagement at the project, which employed 21 people, was set up to help an area which ranks as the third most deprived ward in Wales, and is home to around 1,800.
Everybody was aware at the time who he was - we were honoured to get him
Miriam Beard on the hiring of her brother, a ju jitsu expert
The allegations include one of her brothers receiving £40,615 for providing "Brazilian ju jitsu training", while another brother travelled to the Gambia as part of a partnership's project, though it is "unclear" in what role.
A third brother was said to have received a mobile phone from the partnership costing £1,460, although auditors found no evidence he provided any services to the partnership.
Ms Beard was suspended along with colleague Andy Bunning and the matter has since been referred to North Wales Police.
She told BBC Radio Wales that contracts to provide services for the partnership had gone out to tender.
She said: "In the past we had been bitten by employing people who did not do a job [of providing a service] and... we had lost a substantial amount of money.
"We were then encouraged to bring in people that we trusted. My brother is the British ju jitsu champion and he was the best person to do the job.
"Everybody was aware at the time who he was. We were honoured to get him.
"People that were paid, irrespective of them being members of family, provided a service that was second to none.
"It was family and friends [that] were trusted. And these are some of the best workers that we have."
An auditor in the investigation said alarm bells about the Plas Madoc partnership should have rung with the assembly government earlier after concerns were first highlighted in 2003.
Anybody know the British Ju-Jitsu champion who was teaching BJJ?