HE IS one of the most powerful men  at Liverpool council – yet he is paid a  bonus linked to the amount of money  the local authority spends with telecoms giant BT.

David McElhinney is the boss of  the controversial Liverpool Direct  Limited joint venture between the  council and BT, which costs the city  £70m-plus annually.

And, just this month, he has been  appointed to the council’s powerful  management team, which implements the city’s policies.

But, while he remains on paper a  council employee and on the authority’s payroll, the Daily Post can today  reveal for the first time the details of  the longstanding arrangement the  council put in place regarding Mr  McElhinney’s pay.

Effectively, Mr McElhinney’s  bonus is dependent on the amount  Liverpool council spend with BT.

“That just would never be allowed  in the private sector,” said a senior  council source.

It is an arrangement which has  only come to light after the Daily  Post was leaked a copy of a legal  advice from Cherie Booth, QC, wife  of former Prime Minister Tony Blair,  over Mr McElhinney’s appointment  as acting chief executive of the city  council last June.

The advice, which cost £6,000, says  there are many “practical obstacles  and difficulties” in his temporary  appointment, but that the council  were “confident” those were outweighed by the “benefits he brought  to the city council and taxpayers”.

During the eight months Mr McElhinney led the council, it was  re-negotiating the £70m-plus annual  deal with BT which looks after IT,  benefits, HR, and a number of other  functions.

The council has always insisted  Mr McElhinney was not involved in  those negotiations.

The LDL contract is the council’s  most expensive and has been the subject of ongoing controversy for years  about value for money, stoked by  Labour while in opposition.

Ms Booth says Mr McElhinney has  a clear conflict of interest, and suggests a number of actions the council  needs to take to ensure the appointment is lawful.