Glasgow’s LGBT centre is at the heart of claims that former council leader Steven Purcell was involved in corruption.
Mr Purcell, who is gay, resigned from his position in early March citing stress and exhaustion.
He subsequently admitted to taking cocaine in a newspaper interview and is now facing a police enquiry over his drug use and allegations of corruption.
One of his closest allies, Ruth Black, has been questioned twice over claims she procured drugs for him.
The Herald reports that she was also questioned on Tuesday over allegations that Mr Purcell used undue influence to award her a £50,000 a year contract to run a new lesbian and gay drop-in centre.
Ms Black is a Labour councillor who defected from the Solidarity Party in 2007. She runs a firm called The Castro Glasgow Ltd which was one of the companies competing to run the new centre.
According to the Herald, meeting minutes from June 2009 show she told rivals bidding for the running of the centre that the Labour-run council would not support them and that senior Labour figures including Mr Purcell were instead supporting her proposal.
Ms Black won the contract to run the now re-named Castro centre in October 2009 with a pledge of council funding of £50,000 a year.
Investigations into the award of the contract began when Brian Rodger, the facilities manager of Castro who quit in January, tipped off Glasgow council SNP leader James Dornan, who alerted police.
Ms Black was the head of a previous incarnation of the LGBT centre. She left in December 2007, six months before the centre collapsed with debts of £300,000.
She has denied selling or using drugs and told the Herald she would not face charges or a police investigation.
Strathclyde Police would not confirm or deny whether she was questioned over the corruption allegations.
Mr Purcell is currently thought to be in Ireland. He fled his Glasgow home after quitting as the city’s leader.
He told the Sun four weeks after resigning that he had used cocaine a “handful” of times.
He said he had checked into rehab and attempted suicide in the week following his resignation.
Mr Purcell was once regarded as one of Scottish politics’ brightest stars.
He was elected, unopposed, as leader of Glasgow city council in May 2005 at the age of 32.
He came out in 2006.