The French Polynesian government of Gaston Flosse says payments to some municipalities have been illegal and should be annulled.
The Tahitipresse news agency says the subsidies of more than 10 million US dollars were made to Faa'a and Mahina which both have mayors opposed to Mr Flosse.
The Faa'a mayor is Oscar Temaru who held the presidency from June to October, and his telecommunications minister, Emile Vernaudon is the mayor of Mahina.
A spokesman for Mr Temaru has taken issue with Mr Flosse's claim, saying Faa'a and Mahina were being compensated for past injustices.
He says Mr Flosse disbursed about 140 million dollars 1997 but never gave any money to the townships with mayors belonging to the political opposition.
