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A secret report into allegations that Liverpool council's direct labour organisation (DLO) lost £5 million on a cable-laying contract has sparked a political row in the city.The £16 million contract for Cable North West (CNW) was expected to net the DLO some £1.5 million. But CNW terminated the contract last year because of poor performance.Opposition parties have accused the Labour council of incompetence and mismanagement.But the council has hit back. It claims that a report by accountant KPMG Peat Marwick showed the council had not lost £5 million, but was still owed 'substantial sums' by CNW.This is believed to total £3.8 million. If so, it would cut sharply any loss suffered by the council.Kerry Rickards, director of operational services, said: 'Now the claims consultants have confirmed that monies are owed, meaningful discussions can resume with Cable North West.'Bill Geppert, managing director of CNW, said: 'I am certainly pleased the council has finally said it will prepare its invoices. It has taken them a year to get to that point.'Council chief executive Peter Bounds refused to issue the KPMG report, claiming that publication would prejudice disciplinary proceedings. CONSTRUCTION NEWS