First Minister Arlene Foster has refused to support Martin McGuinness in calling for a UDA leader to step down as head of an east Belfast community group.
There have been calls for Dee Stitt to resign as Chief Executive of Charter NI following comments he made in an interview with a national paper.
The First Minister was pictured with Dee Stitt - a leading loyalist and Chief Executive Officer of an east-Belfast based community group Charter NI - when the group was presented with a cheque for £1.7m from the Executive's Social Investment Fund (SIF).
Stitt has been urged to stand down from his £35k a year role after he gave an interview to the Guardian, in which he described his band the North Down Defenders as "homeland security" and launched a foul-mouthed rant against the government.
Stitt has apologised and been disciplined but has since returned to work.
In a carefully-worded statement, Martin McGuinness said Mr Stitt should reconsider his position, but on Thursday the First Minister refused to support that call.
“The deputy First Minister has made his assessment, I have made my assessment, Dee Stitt is becoming a distraction and has been a distraction from this fabulous amount of money that was announced for east Belfast,” she said.
The opposition parties have cried foul.
Ulster Unionist leader Mike Nesbitt said: “I think we have a stand-off between democracy and paramilitarism, because clearly the First Minister and deputy First Minister would prefer it if Dee Stitt stood aside and he is clearly not going to.
“If you look at the Fresh Start Agreement, it says that the First Minister and deputy First Minister will accept no authority, direction or control on their political activities and I think that this is a direct challenge to that paragraph of the Agreement.”
SDLP MLA Nichola Mallon added: “Certainly there are people in Charter NI doing good work but while this cloud of secrecy continues, that work will be overshadowed.
“That is why we have called for an independent review into the conduct of its CEO and its governance arrangements and certainly we can’t understand why anyone would fear an independent review.”