the issue is that they DID give him the badges, and they DID approve his eagle scout project. On a local level, the national branch then overruled that.
The local leader shouldnt have given him anything to begin with, let him come along and be a part but dont give out merits unfairly earned if you know the national branch wont approve.
And now that local leader will cost them money, because he did a wrong thing to a kid who cant understand that he didnt actually earned what they said he earned.