The contracts in question relate to three jobs carried out on the city's drainage system worth a total of 6.3 million euros and a separate operation for shutting down the Son Reus rubbish tip at a cost of 1.4 million euros.
The bill for the work was passed on to Central Government to pay but Madrid has refused to settle until the result of the audit on the European Union funded projects is known.
Andreu Alcover, a Councillor on the previous Socialist coalition City Council said yesterday that the investigation is due to the way that the invoicing for the project has been broken down into segments rather than because illegal practice is suspected.
He said that in any event, there should be no concern because Central Government was probing all projects where regional institutions had used European Union subsidies (FEDER). Alcover said that there was no element of political strategy that could be called into question in the case of Palma, only technical ones.