Former eThekwini municipal manager Michael Sutcliffe confirmed on Friday he was suing city manager Sibusiso Sithole over the findings of a forensic report.
"Because of the seriousness of the allegations made by city manager Sibusiso Sithole, without any merit whatsoever and with reckless disregard for the consequences, I have therefore started proceedings to claim significant damages," Sutcliffe said on Friday in Durban.
The forensic report deals with fraud and corruption in the municipality.
"The municipality reserves its right to respond on this matter at an appropriate forum and time," spokesperson Thabo Mofokeng said in a statement.
The Manase report, released by co-operative governance MEC Nomusa Dube in February, found that Sutcliffe contravened the Prevention and Combating of Corrupt Activities Act by not reporting fraudulent and corrupt activities.
It concluded that Sutcliffe failed to deal with fraud and corruption which had been raised in a previous report to the police.
He only dealt with the matter two years later, costing the municipality R1.1-million.
The probe was instituted after Auditor General Terence Nombembe said in his 2009/10 report that R532-million had been irregularly spent by the municipality.
Sutcliffe said on Friday: "Allegations made to the effect that I am guilty of a derogation of my duties and that, as a result, the city will be taking action to recover an amount of R1.1-million from me and to institute possible criminal prosecution are completely unfounded."
The Manase forensic investigation did not contain a recommendation that he should be prosecuted, said Sutcliffe.
"Nor does it advocate that monies allegedly lost to the municipality should be recovered from me personally."
Sutcliffe claimed the forensic investigators did not do their job properly.
"It may be that they did not have enough time, or were being forced into politically manipulated deadlines."
The investigations also contained accusations against a number of senior officials.
It found that 10 councillors had business interests with entities which conducted business with the eThekwini Municipality.