The Vanuatu Ombudsman says the Luganville town councillors should be prosecuted for failing to follow the correct procedures in appointing a deupty town clerk in 2000.
Ombudsman Hannington Alatoa says the council appointed Leo Tamata without advertising the position.
He says this was unlawful.
Mr Alatoa says the councillors made no effort to find the most suitable candidate and instead Mr Tamata seems to have been appointed solely because of his political affiliations.
The report is the latest in a series setting out unlawful actions by the Luganville Council, which has since been suspended and replaced by an appointed commissioner.