EU seeks return of money from Fair and Saver/Naver
A European funding body is seeking the return of more than £500,000 in grant money paid out to two victims groups based in Markethill in County Armagh.
One of the groups, Families Acting for Innocent Relatives or Fair, has also had funding it gets from the Office of the First and Deputy Minister stopped.
The other group is called Saver/Naver, which is being asked to return more than £200,000.
Willie Frazer's Fair is being asked to give back more than £350,000.
European peace funds are dispersed by the Special EU Programmes body.
It has told members of the Finance Committee at Stormont that the two groups - which were set up to support the victims of republican violence - are due to be pursued for the return of grants.
Fair was founded by Mr Frazer 13 years ago.
Funding from the Office of the First and Deputy First Minister (OFMDFM) has been cut while it has also been told to pay the EU back more than £350,000.
Mr Frazer has denied misspending cash and called the funding cut "political".
There have been three investigations into the activities of Fair.
One carried out by the PSNI has been completed and the Public Prosecution Service has said there will be no prosecution in relation to that inquiry.
Two other probes have been carried out by the EU and OFMDFM. The latter is ongoing.
The EU investigation relates to two specific activities carried out by Fair.
One was a scheme set up to assist the carers of family members who were injured during the Troubles and to offer them respite.
The carers were given training as well as certain benefits, for example group excursions, trips to the cinema, coffee mornings and meals out together.
Some 280 people benefited from this scheme.
The EU has said it wants £156,000 that was spent on this project returned.
Another scheme involved creating a video archive of victims of the Troubles where they told their stories on tape.
According to Fair, procurement was raised as an issue in relation to this scheme.
The EU wants £190,000 returned for that project.
Mr Frazer said that there was no chance of the EU getting its money back.
"I would go to jail before I would pay it back," he said.
"We have done nothing wrong. The money that we received in the first place was not sufficient to carry out the project that we had taken on.
"They have said to us a number of times that the money was not misspent."
OFMDFM, through the Community Relations Council, has been Fair's main funder for the past decade, paying it almost £1m.
Its investigations are looking at the purchase of Fair's offices in Markethill.
OFMDFM alleged the group did not provide sufficient evidence that it met the conditions of funding for the purchase of the premises.
OFMDFM has also raised questions relating to certain video material produced by Mr Frazer when he stood in the Westminster election in 2010.
The Fair website has links to a YouTube channel called Fair Media which contained his election broadcasts.
OFMDFM alleges the distinction between Willie Frazer's Fair Media broadcasts and the Fair victims group is unclear and is therefore in breach of funding rules.
Mr Frazer denies those allegations.
"I believe the whole thing is political. I have no doubt it is an attempt to remove Fair from the scene.
"What they are saying is no justification for stopping the funding."
It is believed attempts to reclaim this money could still go to court.
An email seen by the BBC from the Special EU programme says: "There is a possibility there could still be a civil lawsuit to recover public monies."
OFMDFM was unavailable for comment.
In February, BBC'S Spotlight programme alleged that Saver/Naver defrauded thousands of pounds of public money.
This was denied by the group.