WIDE Bay Water director Geoff Skerritt has written to the Queensland Audit Office about a $73.5 million debt transferred to WBW two years ago.
Mr Skerritt revealed the audit approach in a fiery open letter to Fraser Coast Council chief executive officer Lisa Desmond.
He said the debt was created in 2011 to ensure the council received a regular interest payment from WBW even if the corporation did not make a profit.
The Chronicle understands WBW has paid an average of $10.5. million to the council each year for least two years, including about $6.4 million a year in interest.
Mr Skerritt said WBW had to pay the council 8.61% interest for five years.
"The dividend from WBW is always going to fluctuate," he said.
"To put us into debt to guarantee an income is obscene. Wide Bay Water got nothing out of it."
Mr Skeritt is one of three directors still in office from a board of six appointed in late March.
The three survivors have been asked to sign new letters of appointment.
Fraser Coast Mayor Gerard O'Connell said the council had only recently met the Auditor-General, and the council and WBW accounts were reviewed each year.
He said there had never been an issue raised over the loan.
"It was a debt equity situation," he said.
No response was available from Ms Desmond on Tuesday night.