More details have emerged about how a secret deal with ferry company TransEuropa unravelled to leave Thanet council £3.4m out of pocket.

A report on the saga reveals that the council’s desperate efforts to pursue debts were frustrated as the company stalled requests to pay back the money it owed.

Assurances that the money would be repaid were repeatedly broken as the company sought new backers to help it out of its cash crisis.

Meanwhile, the scale of the company’s financial turmoil was underlined by a revelation that it owed its fuel suppliers $20m at the time it went into administration this year.

According to the council’s report, the authority was concerned about the ferry operator’s financial position several months before it agreed to defer port fees for a three month period.

The report said: “Initial discussions began with TEF about its financial viability in November 2010.

“At this time, the company advised the council it wished to review the tariff agreement as escalating fuel prices were causing them financial difficulties.”

Six months later, the council and the company, which had operated out of Ramsgate Port for 15 years, signed a deal to defer port fees for three months.

Details of the arrangement were kept confidential.

A separate arrangement to deal with the existing debts was also agreed but a commitment the council would receive regular payments to pay these historic debts on a monthly basis was not met.

TransEuropa told the council in January 2012 that it had secured new investors. As a result, it would resume paying back money it owed.

Despite this assurance, no money was repaid for five months although three payments of £85,000 were made between July and September 2012.

However, these stopped, leading the council to renew its demands.

Again, assurances were given but in the months that followed, despite repeated requests, no money was paid.

Finally, in April this year, the council’s commercial services manager Mark Seed contacted TransEuropa and issued an ultimatum that “demanded the immediate payment of debts as the failure to pay could not go on any longer.”

Just one week later, the company folded.

Green councillor Ian Driver said: “Thanet council was bonkers to allow a company to run up even more debt when it already owed it, the Ostend port authority and fuel suppliers, hundreds of thousands of pounds.”