City councillors in Limerick are furious that taxpayers will have to foot a multi-million-euro compensation package awarded against Limerick City Council.
The local authority is appealing against a €25 million payment awarded to a construction company it sacked from a contract on the Limerick main drainage project.
Construction Ltd was dismissed by Limerick City Council in November 2001 from a €9.5 million contract to lay a 2km stretch of pipe along the banks of the Shannon. While it is still unclear how much the final compensation package will be, it now appears likely that the Department of the Environment will have to foot the bill.
At a heated monthly meeting of Limerick City Council this week, the controversy was aired publicly for the first time. Previously, council officials had not been prepared to comment on the situation, saying they were bound by a confidentiality clause.
But following several attempts by councillors to raise the controversy, the Limerick city manager, Mr Tom Mackey, made a brief statement.
"We had a contract for a particular period of time, and that contract was not proceeding with due diligence," he said.
"It was open to us to terminate the contract, which we did. It then went to conciliation, and a decision was made. We do not agree with the decision made in conciliation - which is not binding - and the issue has now gone to arbitration."
It is understood the arbitrator's decision, which will be legally binding on both sides in the dispute, could take up to 12 months to reach. However, even if Limerick City Council is successful in its challenge, the local authority is still facing a multi-million-euro sum to complete the delayed drainage contract.
At the monthly council meeting, a Fine Gael councillor, Mr Pat Kennedy, was ruled out of order by the mayor, Cllr Dick Sadlier, when he sought further discussion on the issue.
Tenders are currently being considered for the completion of the contract, which could cost up to €20 million, leaving this phase of the main drainage scheme more than €10 million over budget.
"We would want to be stark raving mad if we hand out another contract while the arbitration stage is still not complete," said an Independent councillor, Mr John Gilligan.
Cllr Gilligan also said he found it disquieting "that a mayor could prevent a full city council meeting from airing remarks in relation to this situation. Surely it is the duty of an elected representative to safeguard taxpayers' money."
Several councillors were angry that they had not been informed of the situation by local authority management and said the first they knew of the controversy was through media reports.
The financial situation at the council is already in crisis. At last week's annual budget meeting, it emerged that it spent nearly €11 million more than it earned for the year 2002.