David Weeks, leader of the council until last year, has attacked the basis of the inquiry, the Financial Times reports (p1).
Mr Weeks, who is named in the report and is still a Westminster councillor, is quoted as saying that the district auditor had acted as 'prosecuting council, judge and jury'.
He said the council's housing policy had been approved as legal by Jeremy Sullivan QC, a specialist in local government. The paper also reports Mr Weeks as saying that the district auditor, John Magill, had taken a 'naive and dictatorial view' of council housing policy.
Barry Legg, a former Westminster councillor and MP for Milton Keynes SW since 1992, who is also named in the report, is quoted by the paper as saying: 'I utterly refute any suggestion of impropriety. When the time comes for me to put my case I will be answering in full the matters raised in the report.'
The district auditor's statement yesterday was a heavily edited version of the report's provisional findings; the final report is unlikely to be published for several months. In a heated debate yesterday during prime minister's question time, Labour leader John Smith called the report 'a devastating example of financial corruption and the abuse of power by senior members of the Conservative party.'
Prime minister John Major replied that he would condemn those involved if the allegations were confirmed. However, he said that that people should not be found guilty until they were proved to be.