South Australia’s Independent Commission Against Corruption (ICAC) has found Coober Pedy Council misspent a $1.3 million state government grant.

The state ombudsman has issued two damning reports finding that the $1.3 million State Government grant to improve the outback town's airport in early 2015 went into the council's general revenue account.

Additionally, a portion was spent on road and quarry repairs needed after a storm, which meant the council could not pay contractors hired to work on a local airport.

With pressure to pay increasing, a former finance manager and chief executive asked the then Mayor Stephen Staines to sign off on a rushed $1 million loan using the council's seal, without taking it to the full council.

The report says Mr Staines refused, meaning the loan was presented to two special council meetings, which eventually passed it.

The ombudsman found maladministration had been committed when the council and the former finance manager failed to pay the airport contractors.

The former finance manager was also found to have committed maladministration by:

  • Taking over two years to apply for disaster relief funding after a damaging storm in 2014
  • Allowing over $4 million of council debt to accrue despite State Government power subsidies
  • Failing to lodge Business Activity Statements with the ATO
  • Failing to recover a debt of more than $100,000 owed to the council
  • Overpaying an employee's sick leave entitlements by more than $85,000

The ombudsmen found “the council has had an almost complete change in senior management staff since the relevant events”, and that a new management team was now in place.

Coober Pedy's current Mayor Michelle Provatidis is yet to comment.