The Chief Ombudsman is defending a decision not to release information about severance payments made to the former manager of the Kaipara District Council.
The Mangawhai Ratepayers Association appealed to the Ombudsman after the council refused to explain why chief executive Jack McKerchar resigned and why it paid him $250,000.
Association chair Bruce Rogan accused Dame Beverley Wakem of "siding with the gangsters" when she declined to investigate.
Dame Beverley says she accepts there is a genuine public interest in the reasons for the resignation of a senior council official.
However, she says under the terms of the council's deed of settlement with Mr McKerchar, it was obliged to maintain confidentiality.
Dame Beverley says that is common in such agreements, and disclosing the information could damage the public interest in the council's ability to resolve employment matters.
The Chief Ombudsman says the deed also contains personal information about Mr McKerchar which, if released, would breach his privacy.
However, she says it is still open to the council to review its decision and release more details if it chooses.