The formal warning letter, which was provided to the Otago Daily Times by the council, said Andrew Haulage managing director Colin Calteaux approached a council staff member in December 2020 while they were visiting his depot on unrelated matters.
Calteaux asked the employee if he could put demolition material into the river to cover an area that was eroding.
The council employee allegedly responded by acknowledging they did not see any reason why Calteaux could not do that, the letter said.
In January, he spoke to another staff member about the location where the demolition material could be put.
That staff member provided general advice on how the banks of the Clutha River could be protected, the letter said.
The warning said: "The ORC, through the actions of its employees, is considered to have contravened sections of the Resource Management Act by permitting [Andrew Haulage] to deposit any substance on the bed of the river when not expressly allowed by a national environmental standard".
Andrew Haulage has been issued with two infringement notices over the dumping.
Council deputy chairman Michael Laws said it was "extraordinarily embarrassing" that the council had advised a company which it later took enforcement action against.
"If advice was given, then there seems to be a whole series of people let down — from the construction company, to Fish & Game, to local residents and to the environment."
He said he was unhappy at the council's "lack of transparency" to the public and to councillors.
"Obviously [council] staff knew long before governance [councillors] were informed, and that was only after it was obvious that the Otago Daily Times were going to write a story about it.
"That disturbs me greatly."
Cr Laws said the council had worked hard in the past three to four years after decades of neglect around issues that affected the environment.
"Given that drive — upping policy, upping staff, and upping rates to pay for those staff and policy — it is extraordinary to me that in the middle of 2021, you would have ORC staff advising people that they can do something that is clearly not right," he said.
Chairman Andrew Noone said the situation was "not ideal".
He also felt that councillors should have been informed of the investigation sooner, but did not want to comment further until the situation became "clearer".
The ODT understands an email was sent to councillors by council chief executive Sarah Gardner on Monday evening informing them a story on the topic would likely appear in the media.
The council did not say it was warned over the dumping when it issued a statement, saying the investigation was complete on Friday.
On Monday, in response to further questions from the ODT, the council said the dumping had resulted in a warning, but did not specify the warning had been made to the council.
Regulatory and communications general manager Richard Saunders said the council had not withheld any information on the incident.
Also, he said, the council would also not make any further comment until "the matter was concluded''.
"There are processes that are followed when investigations are undertaken, regardless of which parties may be involved, he said.
"In this instance the EPA undertook the investigation to ensure independence.''
The council did not answer questions about how much Andrew Haulage was fined.
