The government has announced it is reviewing all its work with Oxfam, after the charity was accused of covering up the use of prostitutes by its aid workers in Haiti.
The Department for International Development (DFID) said the charity had to answer “serious questions”.
The UK-based charity received nearly £32m from the DFID in the last financial year.
Its chief executive Mark Goldring said Oxfam did not cover up the incident.
He told BBC Radio 4’s Today programme: “As we speak, aid workers, who are behaving well, are delivering lifesaving assistance with public money across the world and we should be proud of that, whilst we are ashamed of what we got wrong.”
Four staff members were dismissed and three, including the country director, were allowed to resign before the end of the investigation, Oxfam said.
The director was Roland Van Hauwermeiren, who The Times alleges, used prostitutes at a villa rented for him by Oxfam.
The staff had been in Haiti as part of the relief effort in 2011, following the devastating magnitude 7.0 earthquake that killed more than 200,000 people in 2010.
The government move comes amid fresh allegations in The Times that the charity failed to alert other aid agencies about the staff members’ behaviour. Mr Van Hauwermeiren went on to work elsewhere in the sector.
An Oxfam spokeswoman said the charity would not provide a positive reference for any of those who were “dismissed or resigned”.
She added: “Unfortunately, there is nothing we can do to stop individuals falsifying references, getting others that were dismissed to act as referees and claiming it was a reference from Oxfam, or former or current Oxfam staff that worked with the individual providing a reference in a personal capacity.”
Mr Goldring said the charity did “anything but” cover the incident up, adding: “We were very open with the public that we were ashamed of the behaviour of our staff. We still are.”
However, he said the report it released at the time only referred to “serious misconduct”, without giving details of the allegations.
He said: “With hindsight, I would much prefer that we had talked about sexual misconduct.
“But I don’t think it was in anyone’s best interest to be describing the details of the behaviour in a way that was actually going to draw extreme attention to it when what we wanted to do was get on and deliver an aid programme.”
He added: “I am absolutely committed… to wipe out that kind of behaviour from Oxfam and rebuild that relationship of trust [with the public].”
‘Lack of judgement’
A DFID spokesman said the way “appalling abuse of vulnerable people” was dealt with raised serious questions for Oxfam.
He said the department acknowledged that hundreds of Oxfam staff had done nothing wrong, “but the handling by the senior team about this investigation and their openness with us and the charity commission showed a lack of judgement”.
“We have a zero tolerance policy for the type of activity that took place in this instance, and we expect our partners to as well,” the spokesman said.
“We often work with organisations in chaotic and difficult circumstances.
“If wrongdoing, abuse, fraud, or criminal activity occur we need to know about it immediately, in full.”
International Development Secretary Penny Mordaunt had requested a meeting with Oxfam’s senior team “at the earliest opportunity”, the spokesman said.
A No 10 spokesman said that charities should have “robust systems in place” to ensure high standards and “ultimately must maintain public trust”.
Andrew Mitchell, who was international development secretary in 2011, told BBC’s Newsnight it was a “shudderingly awful tale” that was “terrible on every single level”.
But he said he could not recall being told about the incident when working at DFID.
An Oxfam spokeswoman said in a statement on Friday: “The behaviour of some members of Oxfam staff uncovered in Haiti in 2011 was totally unacceptable, contrary to our values and the high standards we expect of our staff.
“Our primary aim was always to root out and take action against those involved and we publicly announced, including to media, both the investigation and the action we took as a result.”
Dame Barbara Stocking, who was the head of Oxfam in 2011, told the BBC that the charity had a long record of having a very good code of conduct.
When it happened, she said, new whistle-blowing procedures, safeguarding practises and training were put in place.
She said Oxfam often worked in very difficult locations “where the rule of law isn’t going on”.