A Glasgow LGBT centre may close within the next week after alleged financial irregularities came to light.
The Castro Centre was at the heart of claims that former Glasgow city council leader Steven Purcell was involved in corruption.
Mr Purcell, who is gay, stepped down in March citing stress. The centre was headed by his close political ally Ruth Black.
She has been questioned by police three times since March over allegations she procured drugs for Mr Purcell and claims he used undue influence to award her the £50,000 a year centre contract.
The Herald reported that senior Labour sources at the city council said the allegations of irregularities included non-payment of staff tax and national insurance, excessive bills to a Perth-based gaming firm for the use of slot machines yet no profits being declared, excessive mobile phone bills and a car being leased from the grant provided by the council.
A council spokesman said Ms Black had been given one week to explain the discrepancies, which were alleged by a whistleblower.
He added that funding for the centre would be suspended if answers were not satisfactory.
Mr Black is a Labour councillor who defected from the Solidarity Party in 2007 and won the contract to run the now re-named Castro centre in October 2009.
She was the head of a previous incarnation of the LGBT centre but 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 there were no irregularities at the centre.
Mr Purcell 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 and came out in 2006.