The mayor of beleaguered Sydney Council has called an extraordinary council meeting to discuss potential legal action against the Minns government.
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The NSW Government ordered a public inquiry into a Liverpool Council in western Sydney after an interim report alleged widespread dysfunction and maladministration.
The Minister for Local Government Ron Hoenig last week wrote to Liverpool City Council about his intention to suspend the council after "serious concerns" were detailed in the interim report.
Council elections in September have also been postponed while the inquiry is being conducted.
But Liverpool Council has confirmed a council meeting has been called for July 22 at midday to discuss the report and potential legal action against the state government.
ACM contacted mayor Ned Mannoun for comment.
Among a string of allegations, the report found evidence of Liverpool council jobs being given on "factors other than merit", including the direct appointment of people with political links to council staff.
Positions the report found had been handed out "based on political affiliation or previous employment roles" included a CEO, three directors and five other positions.
Mr Mannoun is accused of but denies appointing a solicitor he worked within the private sector into a $250,000 role, while another director allegedly instructed the hiring of two immediate family members.
Liverpool MP and Labor councillor Charishma Kaliyanda said she would not be attending the council meeting describing the mayor's action as "unacceptable".
"It is disappointing to see that when faced with the findings of this interim report, the Mayor has resorted to politicising what is an extremely concerning set of allegations," she said.
"The Mayor and some Councillors are more interested in the preservation of their political careers than the safety and wellbeing of staff and residents."