An Auckland Transport team leader lost his job after awarding contracts to roading giant Fulton Hogan, which sub-contracted them back to a company owned by his wife.
The issue came to light only after the Weekend Herald brought the allegation to the council body's attention.
It was alleged that after Erle Bencich was involved in awarding contracts to Fulton Hogan, the company sub-contracted the work back to drainage and pipeline inspection company IDI Contracting Ltd.
Mr Bencich's wife is listed as the sole director of IDI Contracting Ltd in the Companies Office under her maiden name Donna Opai. Mr Bencich has been a former director and shareholder of the company.
In a statement, Auckland Transport said an internal investigation found no evidence of illegal activity.
"However, it was determined that the individual had shown a clear lack of judgment and had not followed policies with regards to declarations of possible conflicts of interest.
"This resulted in the ending of his employment. His last day of employment was November 10, 2015," the statement said.
Auckland Transport has declined to release a copy of the investigation, carried out by Kensington Swan.
The Weekend Herald tried to speak to Mr Bencich at his West Auckland home and through IDI Contracting.
In a reply, Donna Bencich said "the matter is Private and Confidential and we have NO COMMENT".
Mr Bencich was a road corridor maintenance team leader at the road corridor maintenance department at Auckland Transport. The department has an annual budget of about $270 million.
Fulton Hogan chief executive Robert Jones said late in 2015 the company was made aware that an Auckland Transport employee was being investigated for alleged misconduct.
"On learning of this we fully assisted Auckland Transport in their investigation and conducted our own review.
"This confirmed that a sub-contractor engaged by Fulton Hogan did have links with an Auckland Transport employee, and that Fulton Hogan employees involved believed this potential conflict of interest was declared within Auckland Transport.
"At no point did Fulton Hogan, or our employees, derive additional benefit from engaging the subcontractor, and we would have zero tolerance if we ever established any dishonesty was involved," Mr Jones said.
Fulton Hogan confirmed the sub-contractor was IDI Contracting Ltd.
Mr Jones said: "Fulton Hogan has a hard-earned reputation for fairness and honesty gained over more than 80 years and we have been taking the opportunity to remind all our people of this."
The Bencich case is the second case of alleged misconduct within the road maintenance department.
In a separate case, the trial of three top transport officials accused of bribery totalling more than $1 million is set down for September.
Former senior Auckland Transport manager Murray John Noone, 52, faces six bribery charges to which he has pleaded not guilty.
His co-defendants have also denied the offending. Barrie Kenneth James George, 68, faces four charges of accepting bribes in his previous roles as a road maintenance contracts manager with Auckland Transport and, before that, as infrastructure manager with the Rodney council.
Stephen James Borlase, 51, has stepped down temporarily as head of Projenz while facing eight charges of bribing the other two in their capacity as public officials and four charges of doctoring hours worked by subcontractors in invoices to the Rodney council for company services.
Noone resigned as Auckland Transport's road corridor maintenance manager in October 2013, when the Serious Fraud Office stepped in after an internal inquiry commissioned by the council body.
A court previously heard the SFO alleged he accepted more than $1 million in payments, travel, accommodation and other benefits.
The three defendants have been remanded on bail until trial.