THE manager of Donegal County Council, Michael McLoone, has defended himself following a damning report detailing €2.5m in payments to consultants including bills for expensive wines and tips to waiters.

The internal audit relates to the company One Sigma Ltd which was put in place to design a new management system at the council. Highly critical of the use of the company, the auditor detailed fees paid to One Sigma and to other companies associated with consultants Stephen Cang and David Stroll.

Concerns began earlier this year when it emerged that proper tendering procedures were not used in the procurement of the consultants.

The report noted that while the government had ordered a curb on local authority spending on professional fees in 2009, money paid to the company increased by 50% in the same year.

There were also concerns about advance payments made in 2008 due to "cash flow problems" with the company. At the same time the council was operating from an overdraft and was in the process of redundancies.

A clause in the contract insisted the council foot the bill for business class flights between Belfast and London, first class rail tickets and hotels that must be of four star quality.

"My strong recommendation is that a value for money study should certainly be conducted but by an external agency with no vested interest," the auditor stated.

In response to the report, McLoone defended the use of the firm and pointed out that previous work carried out by Cang between 1996 and 2003 was never questioned or criticised. "I am conscious that recouping expenses for wine, tips etc is totally inappropriate and I regret any embarrassment concerned to members by so doing," he said.