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Deputy chairman Michael Laws said perceived conflicts of interest about water policy were not relevant.
The notion that they could be — and some councillors should therefore stay out of the leadership debate — was a fantasy.
Other councillors said they would be amazed if they were prevented from voting.
However, a request by the Central Otago Environmental Society that the matter be considered has been forwarded on by the council to the Office of the Auditor-general.
The office confirmed it had received a letter from the society.
Ms Hobbs is set to face a vote on her removal as chairwoman on Wednesday after nine councillors — a comfortable majority — requested an extraordinary meeting.
Cr Laws has said this is simply about choosing the best person for the role.
The society, however, argues many councillors have farming interests and that they have been subverting national freshwater policy.
"There has been a sustained move by a cabal of councillors to resist the implementation of previous decisions by the Otago Regional Council to protect Otago waterways," society chairman Ray Wright said.
In its letter, the society said although the councillors who sought the extraordinary meeting declared concern about Ms Hobbs’ leadership, "it is apparent that the issue is a specific one, with her leadership on protection of environmental resources, particularly water".
The society listed various councillors’ interests.
Several councillors said the Auditor-general’s office had already taken a careful look at conflicts of interest.
"There is no connection in what we’re dealing with on July 8 and conflicts of interest," Cr Andrew Noone said.
"The vote has got nothing to do with water," Cr Kevin Malcolm said.
"It would be quite amazing if the ability of councillors to choose the next chairperson was put at risk," Cr Hilary Calvert said.
Cr Laws said councillors had shown courage in facing issues head-on.
"The letter besmirches the integrity of every councillor by suggesting they are in some way insincere."
Cr Bryan Scott, a supporter of Ms Hobbs, suggested expectations attached to the society could be unrealistic. Having water interests might exclude a councillor from a debate about water but the appointment of a chairman or chairwoman was all-encompassing.
Asked if the society felt voters had got their choice of councillors wrong, secretary Jillian Sullivan suggested the problem was more councillor conduct since the election.
She was content for the Auditor-general to look into the society’s concerns.
Ms Hobbs said she had no opinion on the society’s move.