Carmarthenshire county council chief executive Mark James will be suspended if a police investigation is launched into “unlawful” decisions at County Hall, the Guardian can reveal.

Council leader Kevin Madge will this afternoon (Wednesday) consult Dyfed-Powys Police Deputy Chief Constable Gary Pritchard following a meeting of full council.

Sources at County Hall and within the Welsh Labour Party claim that should a formal police investigation be launched, Cllr Madge will suspend Mr James pending the outcome of the investigation.

Dyfed-Powys Police is liaising with an external force regarding a potential investigation into the Wales Audit Office’s findings that the council acted “unlawfully” in granting Mr James a tax-payer funded indemnity to cover legal costs in his High Court libel battle with blogger Jacqui Thompson and also in granting a “pay supplement” for “the avoidance or mitigation” of pension tax legislation.

The council is resisting the auditor’s findings and maintains that both decisions were lawful.

However, support for the chief executive appeared to have weakened within the Labour and Independent Group-run authority.

On Friday, veteran Llanelli Labour AM Keith Davies called for Mr James to be “immediately suspended” while Tycroes councillor Calum Higgins called for “an independent investigation” and said the authority should “accept the Auditor’s recommendations”.

Meanwhile, the council has admitted it had not published “all the information and advice” received before granting the indemnity as claimed last week.

The authority released the advice of two QCs, but failed to publish that of barrister Adam Speker - given to the executive board on the day the decision was made - claiming the advice was only given verbally.

However, the advice of Tim Kerr QC written 14 months after the decision repeatedly refers to Mr Speker’s written “Note of Advice dated 17 January 2012”.

After being contacted by the Guardian, a council spokesman said: “The report which went before the executive board regarding the indemnity, which included advice given by Mr Adam Speker, will be published shortly. As there is ongoing litigation regarding we need to check that we are able to publish it in its entirety at this time.”