Westland District Council chief executive Tanya Winter has been suspended as more concerns surface about contracts linked to an under-fire council manager.

Mayor Bruce Smith confirmed Winter was suspended on Tuesday following a disciplinary hearing on Friday over allegations of serious misconduct over wastewater contracts.

"She was offered paid leave but turned it down," he said.

GEORGE HEARD/Stuff.co.nz Flooding in Franz Josef on the West Coast in March 2016 caused $30 million worth of damage.

"She has been suspended while an investigation is carried out by an independent investigator into the circumstances around how the Vivek Goel [Serious Fraud Office investigation] and Franz [Josef] situation occurred without the mayor or councillors being informed."

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Council assets manager Goel is being investigated by the Serious Fraud Office (SFO) over allegations of financial impropriety.

GEORGE HEARD/STUFF Vivek Goel, the Westland District Council assets and engineering manager, is being investigated by the Serious Fraud Office.

Goel planned to build a $7 million sewerage plant in Franz Josef and had personally sourced his own contractor, Techno Economic Services.

Stuff revealed in March that Techno Economic Services was run and operated by Neha Bubna, a cake decorator from South Auckland.

Bubna, a recent migrant from India, said the Franz Josef contract was the first sewerage job her company would have attempted. Stuff also revealed the council had already approved another contract with Bubna to upgrade water treatment facilities in the small Westland towns of Kumara and Whataroa.

Smith said Winter alerted the SFO about Goel before the Kumara and Whataroa contracts were approved by councillors.

"Councillors and myself only became aware after the SFO raided Vivek's house and the entire town was talking about it. It's not good at all. At the same time we were considering the contracts for the Kumara and Whataroa wastewater plants.

"She sat there at the council January meeting while we awarded the contracts and never said a bloody thing about it."

The council was left with $400,000 unconditional contracts for Kumara and Whataroa, of which $275,000 was a Ministry of Health subsidy. No money had been paid to Techno Economic Services, Smith said. The council had not heard from the company since Stuff reported the Franz Josef deal.

Smith said the Kumara and Whataroa contracts were first considered at the December council meeting.

"I looked at the report and said 'guys this is an unknown party with principals based overseas and there is insufficient bonding and retentions. I'm not going to support it'."

Winter removed the item from the agenda and a new contract was drawn up for the January 23 meeting.

It included a $100,000 bond and 40 per cent retention, Smith said.

"On that basis the council voted in favour. You trust your staff."

Winter had alerted the SFO about Goel on January 16. She had had concerns about his employment since October.

"She may have a perfectly good explanation and the investigator may say she has nothing to answer in which case she will be reappointed," Smith said.

Winter said she was taking legal advice. "I will fully cooperate with the investigation and expect to be cleared of any wrongdoing." She has lodged a personal grievance claim against the council.

Former chief executive Robin Reeves will start as acting chief executive on Wednesday.

The council announced in February it was not renewing Winter's five-year contract when it expired in September.

Meanwhile, a council sub-committee chaired by Cr Durham Havill is reviewing all major council contracts Goel was involved in.

"Our preliminary findings have raised more concerns," Havill said.

"We are working on it. I'd say it will take another week or 10 days before we get a clear picture."