The Audit Office is being asked to investigate a $445,000 cash advance made by the previous Far North District Council to its wholly-owned trading company Far North Holdings Ltd without the knowledge of most council members.
Ratepayers' money was loaned to the company before October's local body electionsthis year as an advance to provide Far North Holdings with working capital pending the sale, or divestment, of "non-strategic assets".
These were to have included the divestment of unused council service centre properties at Kaeo and Rawene over which sales were being negotiated in the middle of this year.
But the council asked Far North Holdings to defer any sale until after the local body elections.
Sales of both properties have fallen through, leaving the company with a cash advance of $445,000 that the majority of the previous Far North council knew nothing about.
It's understood only former mayor Yvonne Sharp, one current and two former councillors, together with council chief executive Clive Manley, knew the advance was made to Far North Holdings because the matter was never put before the council.
Mrs Sharp would not comment yesterday. Mr Manley said the Audit Office was being asked to investigate "because of the way the transaction was made without the full council being involved."
He declined to comment further.
The issue surfaced at a council meeting last week as part of a wide-ranging, independent report into Far North Holdings, instigated by new mayor Wayne Brown.
The report, by businessman and former community board member Tony Norman, calls for sweeping changes to the company's operation and structure.
The council instructed the chairman of its Audit and Finance committee, new councillor Steve McNally, to refer the loan matter to the Audit Office for investigation.
Mr McNally said an investigation was being sought because of the timing of the loan transaction.
"The decision (to advance the money) was made without the knowledge of all councillors and it appears there was no resolution to the effect that the money should be advanced," Mr McNally said yesterday.
"We want the auditor to find out who authorised this and for what reason. We want to ensure that proper process was followed."
