Pay rises made to senior members of staff at Caerphilly County Borough Council were "unlawful on a number of grounds", according a report by the Wales Audit Office.
In December workers at the council staged a walkout after the Chief Executive was reportedly given a pay rise of around £27,000 in the September.
The meeting of the Senior Remuneration Committee was not properly advertised in accordance with the Local Government Act and neither were agendas for the meeting made available for public inspection as they should have been.
Certain officers, including the Chief Executive, who would have been (and indeed were) beneficiaries of the decision were present at the meeting to approve the salary increases. No declarations of interest were made and these officers did not leave the room while the decision was made. Consequently they participated in the decision making process when they had a disqualifying financial interest.
Additionally, the report presented to the Committee was written by the Chief Executive who was himself a direct beneficiary of the decision made and who gave advice on a matter in which he had a financial interest.
Finally, this report did not consider the full range of options identified. Nor was there any detailed and explicit consideration of these options in the meeting of the Committee.
Anthony O'Sullivan suspended by council following criticism from the Wales Audit Office that his pay rise was 'unlawful'
Gwent Police have referred the case to the Avon & Somerset force. It followed an investigation by the Wales Audit Office.