A row over a secret pay deal has scuppered plans for a united Staffordshire Chamber of Commerce.
Southern Staffordshire Chamber and Business Link has accused North Staffordshire Chamber of covertly negotiating a deal that left members liable for up to £340,000 compensation for its chief executive.
Brian Carnes, head of North Staffordshire Chamber, renewed his pay contract after negotiations to unite the three organisations were underway.
However, the terms of the pay deal would have meant members paying thousands to Mr Carnes who had been due to switch to a new position as director of membership services in September.
Southern Staffordshire Chamber and Business Link halted the merger just days before its completion after receiving a tip off about the deal.
North Staffordshire Chamber has now walked out of merger negotiations.
Mr Carnes was not available for comment but deputy president of North Staffordshire Chamber Margaret Michell denied the pay deal had caused the merger's collapse.
She said: "It is categorically not the reason for the failure of talks and I am sorry that Southern Staffordshire Chamber and Business Link have given that impression and brought a confidential issue into the public arena.
"We pulled out because both Chambers had very different views on the structure and management of a new body.
"We also felt changes to the way Business Link is funded would make a merger difficult," she said.
However Sue Arnold, president of Southern Staffordshire Chamber, said the pay deal was a key issue and was bitterly disappointed that three years of work had gone to waste.
She said: "We believed the merger would be in the best interests of the Staffordshire business community.
"However, we are unwilling to expose our members to a possible liability which was not disclosed to us until shortly before the merger was due to be completed.
"We bitterly regret what has happened but we remain committed to the concept of one Chamber of Commerce for Staffordshire, although it is doubtful that this will involve the North Staffordshire Chamber."
Treasurer of North Staffordshire Chamber Mike Heenan, who would have been chairman of the combined chamber, has resigned over the affair.
"It is with regret that I have learned that the board of North Staffordshire Chamber of Commerce have withdrawn from the merger with Southern Staffordshire Chamber of Commerce and Business Link Staffordshire," he said. "In
view of the circumstances surrounding this decision, I have resigned as treasurer and board member of North Staffordshire Chamber.
Mr Heenan said members of the North Staffordshire Chamber were not to blame for the fiasco, noting that they had twice voted in favour of the merger.
"I am sorry it has not been possible to pull it off," he said.
Ms Michell said she regretted Mr Heenan's departure from the board.
"We are sad that Mike has decided to step down," she said.
"However, we understand that he personally feels it is appropriate in the situation."
The merger, which would have created one of the largest business organisations in the country, was expected to improve the county's standing with the likes of regional development agency Advantage West Midlands and the Government's regional office.
It was also hoped it would improve Staffordshire's poor economic performance in relation to its size.
"Viewed as a whole, Staffordshire has the largest number of enterprises within the West Midlands and has the second highest potential workforce," Mrs Arnold said
"But despite its size, the county has a comparatively weak economic performance and suffers from associated problems such as a low gross domestic product and relatively low wages.
"The new body would have allowed us to focus on the wider agenda and target issues such as regeneration, the growing skills shortage and the region's poor image."