Halifax is on the hook for hundreds of thousands of dollars because of an unauthorized grant given to a concert promoter that's now out of business.
The city's auditor general investigated and found Wayne Anstey, the acting chief administrative officer, violated municipal policies.
The report sent regional council behind closed doors for five hours Tuesday.
Concert promoter Harold MacKay of Power Promotional Events Inc. was behind the Black Eyed Peas concert and a Country Rockfest on the Halifax Common last summer.
During the first part of 2010, the company received $1.8 million in cash advances from city. That money has been repaid.
But, two weeks before the July concert took place the promoter threatened to cancel the event. Anstey then authorized a $400,000 grant based on ticket sales.
The concerts fell far short of expected attendance. An estimated 20,000 people turned out to see the Black Eyed Peas, but not all of them paid the asking price of up to $150 for their tickets.
Shortly after the popular hip-hop group took the stage, the gates were opened and a large crowd was admitted free.
Power Promotional Events no longer exists. However even if the company were still operating, the city would still be out $359,550, unless its insurance company agreed to cover the loss.
"Mr. Anstey admitted he made the wrong decision in both cases, but he did it to save the concert," Dartmouth Coun. Gloria McCluskey said Tuesday. "My opinion would have been: To hell with the concert."
Councillors insist they knew nothing about either the cash advances or the grant.
Mayor Peter Kelly said he didn't authorize it.
"We met on the issue," said Kelly. "He did not ask my consent on the issue, nor was it given."
Auditor General Larry Munroe said the CAO is not allowed to make those kind of decisions on his own, and the city is not supposed to give a grant to a for-profit company.
Everyone agreed the rules were broken, but after a heated five-hour meeting closed to the public, Anstey remained acting CAO.
Councillors are insisting changes are needed, and Munroe said he expected to have more to say by early May.