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Police have been asked to investigate allegations of fraud and misconduct against two Sandwell Labour councillors.

An investigation by Sandwell Council alleges that former council deputy leader Mahboob Hussain (Oldbury) and his colleague councillor Babu Bawa (St Paul’s) were involved in conspiracy to defraud and misconduct in public offices surrounding a number of compulsory purchase orders and housing allocation deals.

The council published the full report today and announced that it has referred the matter to West Midlands Police Regional Organised Crime Unit.

The report found indications of ‘potential collusion and fraudulent practice’ surrounding a ‘unique’ compulsory purchase order pilot scheme in 1999 which benefitted the two councillors and members of their immediate families.

The report also raises concerns over the allocation of ten council houses to members of Cllr Hussain’s family. It states: “The council has found patterns of behaviour that, at this point in time, look like a conspiracy to defraud and/or misconduct in a public office, as the outcomes of a number of decisions about housing allocations seem to all benefit members of councillor Hussain’s family.

“This included the repeat pattern of use of a number of factors that allowed members of councillor Hussain’s family to be allocated council properties, applications that were originally reviewed and assigned a low band then subsequently raised to the top band, a number of direct offers on properties being made to family members and the lack of a clear audit trail in order to support the decisions that were being made.”

Sandwell Council’s audit committee has referred the report to police.

Council chief executive Jan Britton said: “The council treats all allegations of wrongdoing or impropriety with the utmost seriousness.

“For that reason, we have carried out extensive investigations into a number of issues relating to land sales, housing allocations and other matters that have been brought to our attention.”

He added: “The report concludes that some of the issues require further action while others make recommendations to improve the council’s procedures.

“We have worked extensively to get to the bottom of any alleged wrongdoing as promptly as possible and it’s important to the leader and me, to the cabinet and to the council as a whole that we take action where necessary and move on from this.”

Last year Cllr Hussain was accused, following an inquiry by legal firm Wragge and Co, of a number of breaches of the council’s code of conduct. This included his involvement in the sale of three council owned toilet blocks to a friend for £35,000, way below their £130,000 value. He was also accused of using his influence to get parking tickets issued to his wife and son cancelled or reduced.