The Victorian Government wants to buy a council-owned catering firm that is linked to allegations of evidence tampering.

Last year, a catering company called ‘I Cook Foods’ — which supplies packaged foods for nursing homes, Meals on Wheels and hospitals — was temporarily shut down by the City of Greater Dandenong council and the Victorian Department of Health and Human Services.

Authorities were alerted when an elderly woman’s death was initially attributed to listeria.

Food safety inspectors cleared the business of any dangerous listeria contamination, but, after multiple inspections, the council authorities said they found a slug in the kitchen among 96 food safety charges laid against the owner, Ian Cook, and his company.

Mr Cook has vehemently denied the charges, accusing the council of running a campaign against him and alleging that health inspectors planted the live slug in the industrial kitchen.

The council is among a group of councils that owns a rival catering business, ‘Community Chef’.

Community Chef is co-owned by over a dozen Victorian councils, and provides 3,000 packaged meals a day to vulnerable Victorians.

Despite holding several major contracts, Community Chef has struggled to make a profit since it was set up nearly a decade ago.

Reports say it owes more than $7 million and has received more than $3 million in repayable grants from the State Government since 2011.

A deal is allegedly in the works to sell the firm to the State Government. It is believed that the state will pay each of the councils as little as $1 dollar each for their stake, in exchange for assuming the social enterprise's liabilities.

The State Opposition has called for a parliamentary inquiry into the purchase.

Greater Dandenong Councillor Peter Brown wants that slug story checked out.

“I simply cannot believe that any reasonable person would accept the slug got in there on its own volition,” he told the ABC.

“It appears impossible. It raises doubts about all the other charges.”

The City of Greater Dandenong has issued a statement saying it “absolutely refutes any claims by I Cook Foods that it planted evidence”.