The Independent has learnt that the District Auditor and the Local Government Ombudsman are investigating allegations made in a secret document by a senior executive at Hertsmere Borough Council, Hertfordshire, which implicate a councillor in the deals.
The disclosure will embarrass the Tory party further, coming after the damning District Auditor's report into Westminster council's housing. Last week, it was revealed that another Tory flagship, South Oxfordshire District Council, was being investigated by Thames Valley police after allegations of corruption.
It has emerged that the 'whistleblower' responsible for bringing the allegations at Hertsmere to light was suspended from his post shortly after doing so.
Nigel Rix, land and property manager at the council, was sent home by Hertsmere's managing director, Philip Copland, last October. Mr Rix had written a confidential memo, which the Independent has seen, detailing allegations of 'irregularities' in dealings between a Tory councillor and property developers involving nearly pounds 1m.
Mr Rix was suspended pending a disciplinary hearing after reportedly telling staff in his unit that the allegations were to be investigated. The council negotiated a severance agreement with him and the disciplinary charges were dropped. A secrecy clause in the contract forbids either party discussing the settlement.
In a confidential memo sent to councillors last month, Mr Copland wrote: 'On behalf of the council, I have specifically agreed with Mr Rix that all matters relating to the termination of his employment should remain confidential.'
Mr Copland denied yesterday that the council had tried to keep Mr Rix quiet. He said: 'The council's policy is that we do not discuss details relating to a person's employment. We would seek (a secrecy agreement) in any settlement. We are not trying to hush matters up.'
The District Auditor and the Local Government Ombudsman have mounted investigations into the allegations made by Mr Rix about the sale of council land and planning applications. Mr Rix was not available for comment yesterday. It is believed one of the planning consents involved land in the Borehamwood studios complex, home of Elstree film studios.