Dunedin City Council has suspended its trial contract with Black Power to do maintenance work after a gang leader was arrested.
In October the council awarded a $52,500 contract to a business established by the gang to do weed and litter control and path repairs until the end of June next year.
The contract came about after Black Power members made a submission asking the council to consider giving them maintenance contracts, and set up the business Mauri Kohatu Incorporated.
Council chief executive Sue Bidrose said the suspension of the deal this week was linked to alleged offending by one of the people in the contracting business, Albert Epere.
The contract would remain suspended until a court case and an internal investigation were finished.