The commissioner conducting the public inquiry into Blue Mountains council has cleared staff of claims they lied under oath.
Richard Beasley, SC, reopened part of his inquiry after shock jock Ray Hadley alleged on air that some staff - including the general manager - had given untruthful evidence.
The lying allegations related to Mr Beasley's examination of a possible conflict of interest by two investigators, one looking at asbestos issues and the other scrutinising the appointment of Mark Mulligan as a safety consultant.
Mr Beasley found in May that there was no conflict. But Mr Hadley then claimed the commissioner had been lied to.
"It's an absolute disgrace that the general manager of council and [employee] Megan TeBay misled the commissioner, in my opinion. Because his findings seem to rely on the fact that Mulligan had nothing to do with asbestos, which is just a lie."
Mr Beasley said allegations that witnesses lied to him under oath had forced him to reopen the inquiry.
In the end, he found: "I was not lied to by any witness in the April hearings. In particular, I was not lied to by Dr Dillon, the council's general manager."
He also concluded that a document prepared by Ms TeBay was "accurate and reliable".
Mr Beasley said it appeared Mr Hadley relied on an email that contained several "factual inaccuracies".
Details of the email were not released.
He said the three witnesses, who gave evidence in private, all believed Mr Mulligan had a major role in asbestos management because they "mischaracterised" his actual job as a safety consultant.
Mr Beasley said having to reopen inquiry had created an "unexpected cost".
"Some of that cost will be born by the ratepayers of the Blue Mountains in not only legal fees but in the time that senior staff have been taken away from their normal duties to attend the inquiry."
Council welcomed Mr Beasley's supplementary report. A spokeswoman said: "For the second time following false allegations by 2GB broadcaster Ray Hadley, the council has been vindicated by an independent public inquiry."
The next stage of Mr Beasley's inquiry - into so-called jobs for the boys - will start hearings in the Cultural Centre from September 2.