Queenstown Lakes District Council boss Adam Feeley is facing an Auditor-General probe into how he and the local government body managed his family's land being considered for a special housing area.
Feeley, who is former chief executive of the Serious Fraud Office, wasn't immediately available for comment.
The office of Auditor-General, Lyn Provost, has received numerous requests from locals requesting an inquiry into Feeley's interest in land owned by his family being considered for a special housing area.
This includes any involvement the former fraud buster had in developing the housing accord and council policy prior to declaring an interest.
Last October the Council reached a housing accord with the Government that aimed to boost housing supply and affordability in the Lakes District area.
A week later the council set policy for going through expressions of interest for special housing areas.
The following month Feeley advised Queenstown Lakes District Mayor Vanessa van Uden that his family intended to express interest in creating a special housing area on land they owned.
They submitted an expression of interest in December. Provost's inquiry will consider the nature and extent of any involvement by chief executive in developing the council's housing accord and policy for special housing areas.
It will also consider how the council and chief executive managed his interest in the land and should manage the situation if this land is approved for a special housing area.
Feeley's Rafa Trust is one of 13 applications for special housing area status, which will be considered at a full council meeting on Wednesday.
The Rafa Trust's proposal is for 20 properties, of between 250 square metres and 500sqm, on McDonnell Road - opposite the Millbrook corner on the town's south side.
On Wednesday, council staff revealed their recommendations for the 13 special housing area applications, endorsing just four.
But they were silent on all Arrowtown proposals, including Rafa Trust's, leaving it to councillors to weigh them up.
The biggest public backlash has been aimed at subdivisions in and around Arrowtown, which has spent years establishing a growth boundary.
Council rates records state that the Rafa Trust's land spans 6.175ha and is worth a combined $1.7 million.
Previously, Feeley said he sought advice from the Auditor-General on how to manage the conflict - and it had stated it was comfortable with his approach.
Van Uden said in February that Feeley flagged his "potential conflict" with the whole council, adding: "I am completely satisfied that none exists".
Feeley resigned three years into his five-year appointment as head of the Serious Fraud Office in 2012 to take up the Queenstown job.
He was at the centre of an uproar over whether he was the victim of a smear campaign orchestrated by WhaleOil blogger Cameron Slater and then-justice minister Judith Collins, who was forced to resign from the cabinet.
Feeley had apologised to Collins in 2011 for causing "unnecessary embarrassment" after opening a bottle of wine that had belonged to failed finance company Bridgecorp.
- Additional reporting: BusinessDesk.