An Amman Valley county councillor has said Carmarthenshire county council has been "damaged" by allegations of unlawful payments made in relation to its chief executive.

Quarter Bach’s Glynog Davies described the situation – which has seen the Wales Audit Office question the legality of the authority granting a £23,217 indemnity for Mark James’ libel case against online blogger Jacqui Thompson and £16,353 paid in lieu of Mr James’ pension contributions – as “very disappointing”.

Cllr Davies told a meeting of the full council that the issue had become the hot topic amongst residents.

“There has been more talk out there about this than anything else,” he said.

“When people read of financial issues of this nature they begin to point the finger at the council itself.

“I am personally embarrassed by this situation.

"We cannot as a council afford to be damaged like this again.”

Last week, the Guardian revealed how the auditor general was expected to publish a public interest report into the payments in the coming weeks.

“The Wales Audit Office does not take this kind of step lightly,” said Cllr Darren Price of Gorslas.

“Obviously this matter is a very serious one.”

Cllr Price also raised the spectre of criminal proceedings should the auditor rule that serious wrong-doing had taken place.

“In other authorities arrests have been made,” he said.

“I would like to ask the leader (of the council) to confirm whether the police have made contact with this council or whether there is the potential that they will over the coming weeks and months.”

However, the authority’s chief legal advisor Linda Rees-Jones stepped in to remind councillors that members of the executive board and relevant officers had been forbidden by the auditor’s office from commenting on the situation until the audit process had been completed.

“We each received a letter placing us under restrictions,” she told members.

“It was a very frightening letter.”