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The council took out a £3m loan from the government, in order to build a heritage and leisure centre in Creswell
A parish council in Derbyshire is effectively bankrupt and criminal proceedings against councillors are a possibility, according to a report.
The external report, published by Elmton with Creswell Parish Council on its website, warns the authority will "most likely" become insolvent and unable to pay staff.
The council took out a £3m loan from the government, in order to build a heritage and leisure centre in Creswell.
An external consultant brought in to investigate the council's finances said the "large and systemic failure to follow basic legal obligations" left councillors open to the possibility of being prosecuted.
According to the report, the current clerk of the council found that all emails from before August 2024 had been deleted by former officers prior to their departure - a move described as "very suspect".
'Unfolding crisis'
Failure to report a suspected offence to the Information Commissioner's Office could result in the council and councillors being fined or sanctioned, the document says.
The council has "failed on a multitude of areas... failed to comply with statutory requirements and to discharge its duty to protect public money", according to the report.
It adds this is "the tip of the iceberg that is on course to hit" the authority, which faces an "unfolding crisis".
The council owes more than £230,000 to Bolsover District Council, about half of which is owed immediately as a loan.
The rest is made up of previously unpaid bills spanning the past five years.
This is in addition to the £3m owed to the government.
The report added: "Defaulting on the loans would most likely result in the Public Works Loan Board [a government body] calling in its debt immediately in an effort to protect the government from loss of public money."
The document goes on to say that "given the large and systemic failure to follow basic legal obligations... councillors could face potential prosecution should they been seen to have contributed to taking illegal decisions and failure to take recommended action to avert financial loss once their attention has been drawn to the issue".
Bolsover District Council
Councillor Duncan McGregor announced his resignation from another political position on Tuesday
The report notes the council failed to adhere to the financial rules it set for itself it is legally required to follow, failed to set a budget for the current financial year, and failed to keep its accounts legally.
It says members of the public could also litigate against the council because of its failures.
The parish council is also engaged in legally "non-compliant" disciplinary action against a councillor on the authority.
In April 2024, the parish council raised its share of council tax by 93% to try and alleviate its emerging financial problems.
On Tuesday, the leader and deputy leader of Bolsover District Council announced their resignation from the roles.
The deputy, Duncan McGregor, was the leader of Elmton with Creswell between 2023 and 2024, but had held the position several times going back decades.
The report's findings will be discussed at a meeting on Thursday.
Elmton with Creswell Parish Council and Bolsover District Council have been contacted for comment.
McGregor declined to comment.
