Madonna, Malawi and the mismanaged millions

Plans for academy collapse amid allegations of grotesque waste

Madonna insisted last night that she would continue with her mission to boost the lives of young girls in Malawi, after it was reported that her plans to build an elite academy in the country had collapsed amid allegations that millions of dollars had been squandered on the flagship project.

The board of directors of her charity Raising Malawi, which is backed by Hollywood stars as well as the Los Angeles-based Kabbalah movement, has been replaced by a caretaker team including Madonna and her manager, according to The New York Times.

It is claimed that $3.8m (£2.4m) was already lavished on the controversial $15m (£9.3m) project to build a school for 400 youngsters near the capital Lilongwe in southern Malawi. But an audit commissioned following the departure last October of the charity's executive director, who was the partner of Madonna's ex-personal trainer, criticised senior staff and identified poor management practices.

The decision to scrap the academy was first mooted in January, prompting recriminations from the Malawian government and local villagers angry after giving up their homes to make way for the 117-acre high-profile development. In 2009 Madonna, 52, who has adopted two children from Malawi, visited the region amid a blaze of publicity ahead of planned building work for the institution which it was hoped would create "future women leaders" for the impoverished nation.

But yesterday's New York Times said the scheme had been abandoned and criticised in an internal audit by the Global Philanthropy Group (GPG). It claimed that the report revealed "outlandish expenditures" for the unbuilt academy including "salaries, cars, office space and a golf course membership, free housing and a car and driver for the school's director".

Madonna said she was frustrated. She said she had raised $18m (£11.2m) which will now go towards school building across Malawi, and added: "Sixty-seven per cent of girls don't go to secondary school, and this is unacceptable. Our team is going to work hard to address this in every way we can."

However the New York Times noted that aides were unable to explain why the problems had not been spotted sooner despite Madonna's involvement. Trevor Neilson, a GPG founder, told the paper he had advised her that a costly school was not the best way to further development goals.

He said money had been spent on architects, design and salaries and two cars for staff who had not yet been recruited. "Despite $3.8m having been spent by the previous management team, the project has not broken ground, there was no title to the land and there was, overall, a startling lack of accountability on the part of the management team in Malawi and ... the United States," he said

"We have yet to determine exactly what happened to all of that $3.8m. We have not accounted for all the funds."