A spokesperson from Kensington Palace spoke out in strong terms on Wednesday afternoon, saying, "I want to address the story relating to a guest attending a reception at Buckingham Palace last night.
"This is a matter for Buckingham Palace but as the Prince of Wales' spokesperson I appreciate you're all here and understand you'll want to ask about it. So let me address it head on.
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"I was really disappointed to hear about the guest's experience at Buckingham Palace last night. Obviously, I wasn't there, but Racism has no place in our society.
"The comments were unacceptable, and it is right that the individual has stepped aside with immediate effect".
The Prince of Wales is understood to have been travelling to the United States at the time of the incident and is not expected to make further comment.
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On Tuesday, Ngozi Fulani, chief executive of Sistah Space, was invited to a reception at Buckingham Palace on the topic of violence against women.
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She later recalled the details of a conversation with a member of the royal household on Twitter, describing it as a "violation" and said the experience will never leave her.
Ngozi said the household member challenged her when she said her charity was based in Hackney, saying: "No, what part of Africa are YOU from?"
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A spokesperson for Buckingham Palace said: "We take this incident extremely seriously and have investigated immediately to establish the full details.
"In this instance, unacceptable and deeply regrettable comments have been made. We have reached out to Ngozi Fulani on this matter, and are inviting her to discuss all elements of her experience in person if she wishes."