Niue's financial secretary, whose wages are partly covered by the New Zealand aid agency, has been sacked by the Government.
The Premier, Toke Talagi, is blaming Mike Fleming for the financial strife after Niue stockpiled aviation fuel to cover last year's Pacific Islands Forum leaders' meeting.
Mr Fleming says he is not at fault.
He says he is seeking legal redress and is not prepared to comment further at this point.
But Mr Talagi says the fuel fiasco left the island struggling with a two million dollar debt and he lost confidence in Mr Fleming.
"He didn't manage the affairs, the financial affairs of the country as well as I would have liked. And there was a clause in the contract that enabled him and the Niue Government to ascertain whether if he wanted to terminate he could do it without fault and the same with the Niue Government."
Toke Talagi, the Premier of Niue.