Auckland Council chief executive Doug McKay has become a non-executive director of the Bank of Zealand - a company with business links to the council.
Mr McKay and Mayor Len Brown's office say any potential conflict of interest is managed in accordance with council policy.
The chief executive review subcommittee, chaired by Mr Brown, gave Mr McKay approval last year to accept a board appointment before he leaves the council in December.
The BNZ has a number of commercial arrangements with the council, including providing over-the-counter payment services for rates and water bills and being involved in the council's overseas borrowing programme.
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Mr McKay said that as part of renewing his contract from 18 months to three years, the review subcommittee agreed he could take an external directorship for setting himself up for life after council and fulltime work.
He did not think there was anything unusual about taking the directorship, saying he would be very vigilant about managing a conflict of interest if it occurred.
Most dealings with the bank were handled by chief finance officer Andrew McKenzie and treasurer Mark Butcher. No issues had arisen since joining the board in March, Mr McKay said.
The council's policy says a conflict of interest arises when the personal interest of an employee may be perceived to conflict or potentially conflict with their council responsibilities.
It says open, honest and full disclosure is the best protection against allegations of conflict of interest.
Mr McKay said he was paid a fee to be on the board, but took annual leave on the days he attended board meetings.
Watercare Services chief executive Mark Ford, chairman of Solid Energy and in charge of a group repairing Christchurch's damaged infrastructure, said he did not take money for extra work, and any fees are paid to the council-owned water company.