Bastareaud had told police he was attacked from behind by five men, leaving him with a serious eye injury requiring stitches.
But overnight he admitted he had lied after drinking too much following his team's Saturday night loss to the All Blacks and had fallen in his hotel room, hitting his head on a table.
Mayor Kerry Prendergast told Radio New Zealand's Morning Report the French team "passing it off as an inexperienced young [player] isn't good enough" and she believed other members of the team and its management were involved in the lie.
"There was clearly collusion, there were other players involved, the team doctor's involved, the coach because [Bastareaud] got sent back [to France] so quickly. This is wider than just one player ...
"Other people knew. You can't just say `this is one person, he should take the blame on his own'."
When asked how she knew there were other people involved, Ms Prendergast said she had gained that understanding from media reports.
The New Zealand Rugby Union said it was outraged that Bastareaud fabricated the story that he was assaulted.
NZRU chief executive Steve Tew said like many New Zealanders, he was disappointed that the player chose to make a false statement and cast a negative light on rugby, Wellington and New Zealand through his deception.
"Like all New Zealanders, I am extremely disappointed with this series of events and will be expressing that concern to the French Rugby Federation."
Bastareaud admitted he fabricated the story in a statement on the website of his French club team, Stade Francais.
He said he had had too much to drink on Saturday night and fallen in his hotel room.
"I was ashamed and panicked and I thought I would be sent packing by the team management," the statement said.
"I told the original story because I thought it would be believed, but given the coverage it has subsequently received I thought it would be better to tell the truth."
He apologised to the New Zealand Rugby Union, Wellington, and his team and coaching staff.
Bastareaud now faces disciplinary sanctions from the French Rugby Federation (FFR).
In a statement, its president Pierre Camou apologised to the people of New Zealand and the New Zealand Rugby Union, and said he had asked the FFR disciplinary committee to open an inquiry into the incident.
Doubts over Bastareaud's story arose when CCTV footage from the Holiday Inn hotel where he was staying showed him walking in uninjured on Saturday night.
