Deputy First Minister Martin McGuinness has called for Charter NI chief executive Dee Stitt to reconsider his position.
It came as it emerged that the self-confessed UDA boss returned to his desk at the ex-prisoners' charity yesterday.
The loyalist had faced pressure to step down after his organisation was awarded £1.7m in public funding from the Social Investment Fund and following an interview with The Guardian in which he described flute band the North Down Defenders as "homeland security" protecting his territory "from anybody".
Stitt withdrew an offer to resign after the Belfast Telegraph revealed the face-saving deal -accusing internal opponents of leaking the details in a "dirty tricks" campaign to undermine him.
Yesterday the senior Sinn Fein man said Stitt should reconsider his position in light of the "reputational damage being done to worthwhile Social Investment projects".
He said: "It is clear that the controversy surrounding Mr Stitt is presenting real difficulties to the reputation and efforts of Charter NI.
"That is unfortunate given the good work which Charter NI, and indeed the wider Social Investment Fund, is involved in.
"In the interests of both, I believe Mr Stitt should now consider stepping aside."
Charter NI declined to comment on Mr McGuinness's intervention.
Earlier it said it had carried out a review of Stitt's comments to The Guardian, which had concluded. It did not disclose details of that investigation.
A statement said: "Following publication by The Guardian on-line of an extract of an interview given by our chief executive the board of Charter NI confirmed our view of the unacceptability of the statement made and the language used.
"Our chief executive recognised his error of judgment and apologised immediately for the content of the interview. We have now completed an internal review process in line with our company procedures and best employment practice."
Charter NI said it was "deeply concerned at the damaging impact" of the media attention on the organisation and paid tribute to its staff for what it described as a "testing period".
"We take our governance responsibilities extremely seriously ensuring all aspects of this organisation are beyond reproach, as has been evidenced by all statutory monitoring, evaluation and vouching, and independent professional financial auditing," it added.
Charter NI was initially set up to help UDA ex-prisoners, but it has expanded rapidly in recent years with millions of pounds in Government funding.
Stitt's UDA gang in north Down has been linked to drug dealing, racketeering and intimidation.