Harry left ‘devastated' by boardroom battle at his charity Sentebale
The dispute, which prompted Harry to step down as patron in support of trustees who resigned in opposition to board chairwoman Dr Sophie Chandauka, was described as a 'hostile takeover' by the source.
On Tuesday, the Charity Commission published a report into the episode criticising all sides for making the fallout public with interviews and statements, but the war of words has continued.
Sentebale appeared to suggest allegations made by Dr Chandauka of bullying, harassment and misogyny at the charity – which the commission found no evidence of – may be pursued against individuals through 'avenues more appropriate'.
A source said: 'This has been emotionally absolutely devastating for Prince Harry and (Sentebale co-founder) Prince Seeiso (of Lesotho). What's been perpetrated over the last few months is nothing short of a hostile takeover.'
Seeiso also stepped down as patron of the charity which works in Botswana and Lesotho supporting the health and wellbeing of young people, especially those with HIV and Aids.
The source added: 'You have to remember Prince Seeiso and Prince Harry started this charity nearly two decades ago to honour the work and continue the legacy of their mothers Queen Mamohato and Princess Diana, and the work that they had done in southern Africa to support those living with HIV and Aids.
'In the 19 years that they have worked with this charity, and a lot of the former board of trustee members, they have raised tens of millions of pounds and distributed tens of millions of pounds.'
The commission criticised all parties in the dispute for allowing it to play out publicly and described how all trustees contributed to a 'missed opportunity' to resolve the issues that led to the serious disagreement which risked undermining public trust in charities generally.
The regulator, which cannot investigate individual allegations of bullying, found no evidence of systemic bullying or harassment, including misogyny or misogynoir at the charity but acknowledged 'the strong perception of ill treatment' felt by some involved.
After conducting its regulatory compliance case the commission issued a Regulatory Action Plan with Sentebale saying it had complied with the steps, from implementing an internal dispute policy to improving the charity's complaints and whistle-blowing procedures.
The trustees who resigned said in a statement they were 'gravely concerned for the future of the charity' adding they were 'disheartened' by the way the regulator had 'chosen to ignore key concerns and irrefutable evidence raised with them regarding the leadership and oversight of Sentebale's chair'.
Sentebale said in statement: 'The Charity Commission is explicitly clear, including in its public guidance, that it is not the commission's responsibility to adjudicate or mediate internal disputes. This would include individual allegations of bullying, harassment, misogyny, misogynoir etc.
'As a result, the commission has not investigated any individual allegations and therefore has not made any findings in relation to individuals, including Prince Harry.
'The issues not investigated by the commission can and may be dealt with through avenues more appropriate than the commission.'
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