City of Newcastle has written off a $164,000 debt owed by an unidentified bankrupt who bought smart poles off the council in 2019 but never paid for them.
Councillors voted on Tuesday night to write off the debt incurred by an electrical contractor who bought "lighting smart poles" to install in the "Civic Link" precinct.
Deputy lord mayor Declan Clausen said he was "surprised" to learn the council was in the business of selling the poles.
"This is a fairly serious matter to come to the elected council for consideration," Cr Clausen said.
"$164,000 isn't an insignificant sum of money ...
"I have to say I was surprised we were playing the role that we have done in respect to this item, that we were the intermediary selling smart poles to the private sector.
"I don't think that that it is consistent with the way we deliver other types of infrastructure in the city."
Cr Clausen said senior council staff had assured him in recent days that they had done a "significant amount of work ... to ensure there isn't a repeat".
"It is unfortunate the ratepayers need to write off such a significant amount of money tonight," he said.
A staff report to councillors said "ongoing action" by the council's debt management team and its contracted mercantile agent had failed to recoup the money.
"CN has subsequently revised its process so that it is paid for smart poles in advance of supplying stock to third parties," the report said.
"Further, it is anticipated that once existing smart poles supplies are reduced to a number that matches CN's scheduled public domain works in select areas of the local government area, third parties will be directed to smart pole manufacturers to secure product."
A more detailed report on the nature of the debt was kept confidential.
The council started installing hundreds of smart poles in the inner-city and suburbs in 2017 as part of its Smart City strategy, which attracted a $5 million grant from the federal government.
The staff report said the debtor company had no assets and had significant outstanding debts.
"The debt was primarily incurred in May 2019 under the direction of the Innovations and Futures team within CN and invoiced to the debtor in June 2019," the report said.
The company involved was placed in external administration in September 2020 and its sole director was declared bankrupt the following month.
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