Earlier quoted context omitted.
Based on the article: Some founders/directors kept using money from the foundation to pay their own private companies to get work done. This is highly irregular: you can’t manage funds that aren’t yours and use those funds to buy from a company which gives you profit. Legal council warned the of this irregularity, and nothing was made to change the status quo during years.
Isn't this theft, if true?
That's definitely a conflict of interest, but I wouldn't call it theft unless you prove the foundation was getting a bad deal. Could the foundation have gotten the work done better or cheaper hiring non-represented companies? That's the question you have to answer to call this theft.
It doesn't seem that is really what the foundation is arguing though, so I'm guessing it wasn't that bad. It seems more their argument is that this violates the non-profit laws they operate under.