New South Wales Parliament has been told the founder of a collapsed Australian waste operator came from "nowhere" to "dubiously dupe" a council into a contract worth millions of dollars.

Bioelektra Australia was placed into liquidation a fortnight ago after it entered voluntary administration in May.

The company had been contracted by Shoalhaven City Council, on the state's South Coast, in 2018 to divert 96 per cent of the city's red bin rubbish from landfill using sorting technology not yet available in Australia.

Its founder, Fred Itaoui, said he would acquire autoclaves from the company's Polish namesake, Bioelektra Group SA, to turn the council's West Nowra tip into the country's "first advanced waste treatment plant".

"It's going to be a revolution in the Shoalhaven economy by creating resources out of the red bin," he said when the project was officially announced in January 2019. 

But earlier this month, the Warsaw-headquartered Bioelektra Group worked to distance itself from the Australian business, claiming the entities had no formal ties.

On Wednesday, Kiama MP Gareth Ward used parliamentary privilege to claim Mr Itaoui used the "shelf company" to "rip off" the council, and accused the organisation of failing to do its due diligence.

"I need to use the time of this house to present evidence of what appears to be wilful neglect and an abject failure by Shoalhaven City Council to undertake the most basic due diligence that has resulted in ratepayers being ripped off," Mr Ward said.

"I refer to the smouldering and discombobulated mess that is council's contract with Bioelektra Australia and its managing director Fred Itaoui.

'Seemingly came from nowhere'

In delivering his scathing private members' statement to parliament about "how [Shoalhaven council] got dubiously duped", Mr Ward said he could not fathom why the organisation decided to pursue a contract with Mr Itaoui instead of the Polish Bioelektra Group.

"What I find inexplicable is that councillors go to Poland to visit a waste management company … that same company then visits the Shoalhaven," he told parliament.

"But rather than enter negotiations with the company with which council was working, council enter an arrangement with an entirely different company that doesn't own the technology, has never delivered a waste contract, and has no legal relationship with Bioelektra in Poland.

Shoalhaven City Council said it had committed $2 million for initial infrastructure to assist the project, and a fee for each tonne of household waste deposited at the site was due to be paid to Bioelektra Australia once the facility was operational.

Possible ICAC referral

Mr Ward urged the local government minister to launch an independent inquiry into the council's dealings with the company and claimed the waste business was not the only one of Mr Itaoui's operations to go bust.

"According to his LinkedIn profile, [Fred Itaoui] is the general manager of Swan Services Pty Ltd," Mr Ward told the parliament.

"Liquidation proceedings concerning Swan Services in the NSW Supreme Court in 2016 indicate that Mr Itaoui was the chief executive officer for the Swan Group from March 1993 until October 2012.

"He has also been the managing director of Clearlink Services, which was the subject of a proposed deregistration notice under the Corporations Act."

Mr Ward said he would consider referring the matter to the Independent Commission Against Corruption (ICAC) if the minister ignored his request.

Probe 'welcome'

On Thursday, Shoalhaven Mayor Amanda Findley accused Mr Ward of "carrying on like a pork chop" over the issue, and said she would welcome any potential probe by the ICAC into the contract. 

"If the ICAC want to come and say hello to Shoalhaven City Council, I welcome them with open arms," she said. 

"They'll come up with the same answer that everybody knows, that the due diligence around the creation of the contract was absolutely there."

Bioelektra Australia and Mr Itaoui have declined the ABC's repeated requests for comment.