Pair face hundreds of charges over roading work paid for but allegedly never done.
A council executive is alleged to have helped fleece the old North Shore City Council of $840,000 by paying a friend for roading work that was never done.
Hemant Kumar Maharaj, 57, appeared in the Auckland District Court yesterday with his co-accused, Suresh Din, 56. They face more than 300 charges laid by the Serious Fraud Office relating to 151 invoices.
The men were remanded without plea to reappear next month.
SFO fraud and corruption general manager Nick Paterson said Maharaj, a transport network team leader for North Shore, is accused of receiving and approving invoices issued by Din.
Din was paid, but it is alleged that no work was actually done.
Mr Paterson said that in its "broadest sense" the work was for roading repairs to pavement, kerbing and safety fencing.
Maharaj and Din are jointly charged with 73 counts of using a document with intent to defraud and 78 of dishonestly using a document over about 10 years.
Maharaj also faces two charges of attempting to pervert the course of justice in relation to the alleged alteration and provision of a diary and the alleged creation of a receipt book.
Din faced one count of using a document with intent to defraud and six counts of dishonestly using a document in relation to the alleged dishonest use of income tax returns that claimed expenditure he had not incurred.
SFO chief executive Adam Feeley said the amount alleged to have been defrauded from the council was very significant, and the case "underlines the need for local government to have very robust audit processes to either prevent, or enable early detection of, fraud".
He said New Zealand enjoyed "an outstanding international reputation for being relatively corruption free".
But that reputation could only be maintained by good fraud prevention "and swift response to any allegations which could undermine confidence in the integrity of our public sector".
Investigating allegations of corruption in the public sector was a priority area for the SFO.
Doug McKay, chief executive of the new Auckland Council, which encompasses the old North Shore City Council, said his agency had in place a comprehensive fraud-prevention, detection and investigation programme.
It also had stringent controls on the procurement, purchasing and payment for goods and services.
"Over the last three weeks, since the formation of the new Auckland Council, we have supported and co-operated fully with the SFO's investigation," he said.
Mr McKay said the council would seek full restitution if the accused men were found guilty.
Auckland local body activist Penny Bright said the claims against Maharaj and Din revealed the need for a "transparency framework" for local government which included a register of interests for staff and elected representatives.
