500 Startups admits it kept Australian partner in the dark over investigation into Dave McClure

500 Startups has apologized to its Australian partner LaunchVic after the U.S. firm admitted that it failed to disclose an internal investigation into sexual harassment claims against co-founding partner Dave McClure.

LaunchVic is a $60 million entrepreneurship scheme backed by the government of Victoria, Australia’s second most populous state. It’s a major investor in 500 Melbourne, 500 Startup’s first accelerator and VC fund in Australia, after it provided a grant of over $2 million to the project.

McClure traveled to Australia as recently as two weeks ago as the main figure to launch the program in partnership with LaunchVic and government officials. That’s despite the fact that 500 Startups had began an investigation months before into complaints about his behavior from women he had propositioned, according to McClure’s fellow co-founder Christine Tsai.

McClure and fellow VC Chris Sacca were two of the most recognizable figures named in a New York Times report that exposed a culture of sexual harassment among some male investors in the U.S.. McClure has since penned an apology, and he remains a part of 500 Startups. [Update: Since this story was published, McClure has resigned from the firm.]

In the immediate aftermath of the Times’ story, Tsai said McClure had switched his role a few months earlier and was now “fulfilling his obligations to our investors as a General Partner,” leaving the day-to-day management to her. Yet, he still flew to Australia as the face of 500 Melbourne weeks before his exposing, and he was widely quoted in media around the launch.

In a note published today, Tsai admitted that both partners and the firm’s Australia-based staff had been kept in the dark:

I want to make it clear that neither LaunchVic, nor the Australia team, were aware of the issues that have recently come to light and learned about it just days ago when it was announced in the press. We regret the decision to have Dave participate in the program launch and the impact it has had on everyone who so publicly supported us up until this point. During these events, we held Dave up to the community as a hero. And while most heroes are actually human, Dave has made mistakes that are inexcusable and completely against everything that 500 stands for and works towards.

LaunchVic said this morning that it has “put 500 Startups on notice.” The organization said it met with Tsai and other management at the firm, informing them that it will monitor for positive changes in its culture. It may consider pulling its support if it doesn’t like what it sees.

“It is unacceptable 500 Startups hadn’t reported these issues to us, and that Dave McClure was allowed to travel to Australia to represent 500 Startups,” LaunchVic CEO Kate Cornick said in a statement.

“500 Startups leadership team have communicated to us their strong commitment to free the startup community of harassment. To this point we believe that something positive can come from this horrible situation, which has highlighted the extent of harassment in the tech and startup world,” Cornick added.

Cornick did, however, express her confidence in Rachael Neumann, who is leading the 500 Melbourne initiative.

“Rachael is well known to LaunchVic, and has long championed diversity issues in the Australian and global startup communities,” she said.

Neumann herself was apparently unaware of the investigation into McClure, as she pointed out on Twitter.

LaunchVic isn’t the only partner to reveal that it was unaware of the investigation prior to the New York Times story. A number of LPs came through with similar accounts on Twitter, including high-profile entrepreneurs Mitch Kapor and Freada Kapor Klein, and HomeBrew VC Hunter Walk.

With a number of 500 Startups’ global funds still in the process of fundraising from LPs towards a final close, it remains to be seen how the revelations around McClure will impact the firm’s business — particularly as he remains part of the organization.