The chairman of Holbeach Parish Council has resigned over allegations about his role in running a social club in the town.
Coun John Spencer stood down as council chairman on Monday just a week after the Guardian revealed that police had launched an investigation into the financial affairs of Holbeach United Sports and Social Club.
It is alleged that the club ran up debts of more than £40,000 when its management committee, chaired by Coun Spencer, resigned last September.
Coun Spencer was confronted with the allegations by several business owners in Holbeach who claimed that they were owed money by the club during a council meeting last month.
In a letter read out at a council meeting on Monday, Coun Spencer said: “It is with regret that I have decided to stand down as chairman of Holbeach Parish Council for the present time.
“I consider myself to have acted in an honest and forthright way but take this action in order to protect the public perception of the parish council until my point is proven.
“I still believe that what has happened at the social club in no way reflects my ability to do a good job within the parish council or the community, nor conflicts with any parish council business.
“Having decided to stand down as chairman, it remains my wish to carry on as a parish councillor as support to the local parishioners.”
Lincolnshire Police is investigating the findings of a group set up to look into the financial affairs of the club, although no arrests have been made so far.