However, no further disciplinary action will be taken.
A code of conduct inquiry into Cr Victoria Bonham was listed under the "closed meeting" part of the agenda for Wednesday's full council meeting.
Cr Bonham confirmed on Monday she was facing an investigation.
In an emailed statement sent yesterday the council said a "material breach" had occurred.
"The Central Otago District Council considered a breach of the code of conduct by Cr Victoria Bonham.
"It was found that a material breach had occurred due to comments made by Cr Bonham and that those comments could bring council into disrepute."
Cr Bonham had tendered an apology and the council had determined "no further penalty would be imposed".
A first-term councillor, Cr Bonham represents the Earnscleugh/Manuherikia ward.
The statement said neither the council nor Cr Bonham would make any further comment on the matter.
