Coun John Spencer is facing calls to quit after several business owners claimed they were yet to be paid for work done at Holbeach United Sports and Social Club.
The claims were made at a parish council meeting on Monday when an attempt was made to call for a no-confidence vote in Coun Spencer who became chairman in May.
During the meeting at the Reading Rooms, John Kinder of JWK Electrical in the town said: “Some of the businesspeople of Holbeach would like to ask parish council members if they are aware of the actions of Holbeach United Sports and Social Club which was run under the chairmanship of Coun John Spencer.
“We are led to believe that the club’s management has run up debts in excess of £40,000 with local suppliers in the town, but this is not yet known as we understand that no accounts for the club have been produced for several years.
“Coun Spencer and the entire committee have now resigned, obviously hoping to sweep this matter under the carpet and leave us all out of pocket.
“Unfortunately for them, we understand it’s not as simple as that as the club was registered as a Community Amateur Sports Club (CASC) with HM Revenue and Customs, so we are passing on information to them.”
Richard Ladbrook of Laddies Famous Ices, Holbeach, another of the alleged creditors, told the Guardian: “I’m pleased it’s out in the open because I’ve had several people commenting to me about it and at the end of the day, I think something needs to happen.
“Like a lot of other people, I’m annoyed about the situation because as ex-chairman of Holbeach United Sports and Social Club, I believe Coun Spencer has let the community down.
“I can’t see how he can carry on in the office he has, as chairman of the parish council, without going along to everybody who claims they are owed money to sort the situation out.”
The no-confidence vote in Coun Spencer was put forward by Coun Paul Foyster who said: “It’s damaging to the council to have a chairman who could be under investigation over what are fairly serious allegations.
“I feel it’s best if Coun Spencer steps down until the allegations are investigated.”
Holbeach United Sports and Social Club was reformed in 2005, three years after the Labour Government allowed community sports groups to be exempt from corporation tax and claim gift aid from the Treasury of 20 per cent.
Coun Francis Biggadike, South Holland district councillor for Holbeach, said: “I was on the club’s committee when we got CASC status in 2005, so I’m gutted to think that after all the hard work that’s gone on, everybody’s efforts might have gone down the drain.”
Coun Spencer said: “Every single question I’ve had about the club, I’ve answered and I can’t go any further than that because I don’t know any more.”