"I am aware that Mr Khouri purchased the Lexus and Passat at public auction, although I am unable to name the auction company involved in the transactions," Mr Montague said.

As part of his $330,000 contract, Mr Montague is entitled to a council-provided car. In June 2014 Mr Montague took delivery of his new car, a VW Golf GTI.

His old car, a Lexus IS sedan, was bought by Mr Khouri for $43,200.

Two years earlier, Mr Khouri bought Mr Montague's VW Passat for $46,500.

Mr Montague would not elaborate on the circumstances in which his friend came to buy both council cars, or identify which auction house the council used to sell the cars.

"I suggest you contact the auction house or Mr Khouri if you require further information," he said.

Mr Khouri did not return Fairfax Media's calls.

Vendors can choose to auction cars or to sell before auction at a fixed price. It is not known which method the council used to sell the cars.

Fairfax Media recently revealed that over the past four years Mr Montague ran up a $50,000 lunch bill at Il Buco restaurant in Enfield, with Mr Khouri being an occasional guest.

In 2013 Canterbury ratepayers also forked out $700 for a visiting sister-city delegation to have dinner at Saffron, a Canberra restaurant co-owned by Mr Khouri, who was once described in state Parliament as a Labor party "fixer".

"Bechara makes his money by opening doors for developers," an associate said of Mr Khouri.

Mr Montague said his friend rang occasionally to see where development applications were up to but "he has never asked me to do anything".

Meanwhile, Mr Montague is fighting attempts by councillors to sack him at an extraordinary meeting to be held on January 27.

In a memo to councillors dated January 22, Mr Montague revealed he had made a "disclosure" to the Independent Commission Against Corruption about the behaviour of Liberal councillor Michael Hawatt and Labor councillor Pierre Azzi in relation to the appointment of a planning director.

Both councillors have denied any wrongdoing.

In 2012 a similar move by Cessnock council to remove their general manager Lea Rosser was thwarted after she made what is called a "protected disclosure" to ICAC, which means the person can be protected from retaliatory action being taken against them.

At the time David Williams, SC, barrister for eight of the 10 Cessnock councillors trying to remove the general manager, said the timing of the report to the ICAC was motivated by concern for her job.

"A few days before the [council] meeting is to be held she lodges her so-called public interest disclosure," Mr Williams said.

MP David Shoebridge, the Greens' local government spokesman, said: "The situation in Canterbury council is untenable. It needs an immediate, thorough and quick investigation by the department and ICAC to get to the bottom of this sorry mess.

"There are real concerns that with the protected disclosure having been made by the general manager, any detrimental action taken against him could land the council in Supreme Court litigation,"