HUGE failures in the city council's two largest contracts for crucial services have been uncovered after a three-month inquiry by external auditors.
Investigators brought in to examine the £520m deals, after complaints about the integrity of officers, have made 43 recommendations about how they should be overhauled.
Although Liverpool Direct Ltd (LDL), which operates call centres, and street cleaning organisation Enterprise were set up to cut costs, chief executive Colin Hilton admitted that implementing the changes could save millions of pounds of tax payers' cash.
Last night, Cllr Paul Brant, deputy leader of Liverpool's Labour group, branded the revelations a "scandal".
He told the Daily Post: "If the chief executive is admitting that millions of pounds could be saved by bringing in the recommendations, then that means millions of pounds must already have been wasted.
"It is an absolute scandal. The recommendations by the auditors make it very clear that the council doesn't know if its contracts are value for money.
"LDL seem to have been disguising their pricing structure, according to one of the points raised.
"And it states that the transfer of staff between the council and LDL should not happen. It is clearly a conflict of interests.
"We have been raising issues about these joint venture companies for many years, and I'm glad our concerns have been validated."
Specialist auditors KPMG carried out the investigation, but Liverpool City Council has refused to publish the full report, insisting it must be kept confidential for commercial reasons.
It has, however, released the recommendations, which it plans to implement by the end of March next year.
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