According to The Herald, Mears Scotland secured substantial concessions in its housing repairs contract with the council - costing the authority some £25 million.

However, council leader Jim McCabe, who championed a decision not to re-tender the contract, has never formally acknowledged his friendship with Mears managing director Willie Docherty and his associate Steve Kelly.

Now SNP councillor Julie McAnulty has asked the Commissioner for Ethical Standards in Public Life, Bill Thomson, to investigate whether Mr McCabe should have made a declaration of interest.

Her decision follows a report from the council’s own auditors, accountants Scott-Moncrieff, which said councillors had not had full facts before deciding not to re-tender the deal.

Ms McAnulty, when asked about the complaint, said: “It is clear from the Scott-Moncrieff report that there remain unanswered questions about why the Mears contract was not re-tendered.

In the light of these concerns, I thought this issue should be looked at again.”

When asked by The Herald, Mr McCabe acknowledged his friendship with Mr Docherty, whose wife Sadie is Lord Provost of Glasgow.

However, Mr McCabe has said his relationship with Mr Docherty, formerly head of Glasgow’s arm’s-length construction firm City Building, had no bearing on his views on the Mears contract.

Mr McCabe believes that re-tendering would have posed serious risks to the long-term operation of repairs for thousands of tenants.

The Commissioner’s office does not comment on ongoing investigations. The Herald said its enquiries in to Mr McCabe’s conduct are at a very early stage. News of its work emerged as council officials and other parties were contacted by investigators.

A spokesman for North Lanarkshire Council said: “At the Standards Commission’s insistence, its enquiries are conducted in strictest confidence; a condition both the council and Council Leader respect.”

North Lanarkshire Labour group earlier this month split by 18 votes to 11 as members discussed the Scott-Moncrieff report at a private meeting.

The issue flared up at a further Labour group meeting this week after the party suffered another by-election setback.

The administration believes the auditors support their position.

Labour councillor Tommy Morgan, however, said he believed the accountants had vindicated concerns he expressed about the contract as early as November last year.

Mr Morgan was dismissed as chairman of the audit and governance panel - on which Ms McAnulty also served - after he questioned the contract. He is now suing the Labour Party over the issue.