North Lanarkshire Council leader Jim Logue has been criticised by one of his senior officials over the running of NL Leisure.
An audit report raises concerns about overseas trips and questions why two separate companies were set up without the council being notified.
The report also says NL Leisure chief executive Blane Dodds was not “held to account” by his board of directors.
Mr Dodds left the organisation last year as it faced a huge funding cut from the council. In his place a general manager was appointed on what is understood to be a much-reduced salary.
NL Leisure runs sports and leisure facilities on behalf of the council. It emerged last year that it had set up two associated companies but Councillor Logue, who was chairman of the NL Leisure board at the time, had not declared his directorships of these on his council register of interests.
Councillor Logue said this week he had registered his posts with Companies House, but legal advice was they didn’t have to appear on his council list.
He described as “nonsense” a claim by Ken Adamson, the council’s head of audit inspection, that there were no reports to the NL Leisure board about the companies’ activities.
In a report to councillors Mr Adamson said the need for the companies was not clear and their establishment had not been approved by the board.
He added: “ here were significant weaknesses in the governance arrangements within NL Leisure which meant the board was unable to provide effective scrutiny and challenge or hold the then chief executive to account.
“We also raised a number of issues about overseas travel.”
Mr Adamson accepted there have since been changes to the NL Leisure management, but warned council officials will keep a closer eye on the organisation.
Councillor Logue said one company, No Limits Leisure, was set up in a bid to boost income by providing services to other councils, but a proposed deal with another authority fell through.
Another, ECSA, existed to pursue grants when North Lanarkshire was European City of Sport.
Councillor Logue defended overseas travel, saying: “The council has hosted prestigious events like the International Children’s Games. You don’t get these without canvassing for support abroad.”