Valuable land for dozens of homes was sold by a Labour-run council in a ‘scandalous’ deal which saw taxpayers receive just £50,000, the Daily Mail can reveal.

Oldham Council, Greater Manchester, was due to receive £175,000 for a 250-year lease of the site, on which 37 homes are being built.

But the remaining £125,000 is said to have been written off in exchange for the chosen developer – run by a local businessman – paying to make newly-discovered, historic mine workings safe.

The company, Community Build Werneth, was hit by the spiralling cost of professional fees, reports and site preparation, going bust in 2021.

It owed a slew of fees, while members of the public who had paid deposits of £25,000 for houses were also left out of pocket.

Oldham Council agreed to sell the four-acre site to CBW in 2017 after over three years of negotiations - despite the ruling cabinet being warned the company had not provided financial details.

There are now calls for a full investigation into the land sale and even a senior Labour councillor admitted: 'It doesn't look like a good deal'. 

After CBW’s collapse, the land was sold on to other companies and individuals for a total of £1.7m to repay debts - and the houses are now being built.

However, the council will not receive its outstanding £125,000 and some deposits have still not been returned to individuals.

Oldham has been a Labour fiefdom for most of the last 40 years and is currently run by a minority Labour administration after the party lost overall control in 2024.

Kamran Ghafoor, leader of The Oldham Group of independent councillors, said: ‘It’s scandalous, absolutely.

‘If the election goes our way, there will be investigations into who has done what and what happened. We’ll open up the books.’

The defending Labour administration’s cabinet member for enterprise, Fida Hussain, who endorsed CBW’s project in 2014 when he was pictured with sole director Sajjadur Malik for a publicity shot, now believes that ‘on the surface of it, it doesn’t look a good deal’.

Mr Hussain, who is defending his seat in Werneth in Thursday's poll, said: ‘I wasn’t aware of all the details then as I wasn’t on the cabinet. 

'The site was an eyesore and the local community wanted the project to go ahead, so that’s the reason I was supportive.

‘I do want to see improvements and am glad to see building work move forward.’

Another Oldham Labour councillor, Zahid Chauhan, a GP who was two-times mayor and a former cabinet member for health and social care, supported a ‘full investigation’ into what went wrong.

Dr Chauhan, who was landlord of a property where Mr Malik had registered CBW with Companies House, added: ‘Any money owed to the taxpayer should be recovered, if possible.’

Dr Chauhan said his only connection with Mr Malik was buying the property where the businessman was already a tenant.

Mr Hussain said he had no connection with Mr Malik other than being the ward councillor.

His leading challengers at tomorrow's election include local businessman and boxing gym owner Mohammed Ali, known as ‘Irish Imy’ - once jailed for seven years for being the getaway driver for gangland figure Dale Cregan, who later murdered two policewomen. 

Approached by the Daily Mail, Mr Malik – who splits his time between Oldham and Bangladesh - said: ‘There were certain mistakes I made but I have made no money from this. I have lost money, lost my honour and had threats from people wanting deposits returned.’

He said he was approached to put together the development company due to his standing as a local businessman who was involved in property.

However, due to the council ‘dilly dallying’ with granting approval and rising legal and preparation costs which reached £1.2m, Mr Malik said the money from deposits was quickly eaten up and he ran out of cash.

He said the council agreed to waive the remaining £125,000 it was owed after the discovery of old mine workings on the site, which Mr Malik agreed to pay to have made safe. 

The businessman said he is ‘still repaying’ some outstanding deposits and added: ‘I wish I had never been involved. I am open to an independent audit. The council played a big part in setting me up, tying my hands to fail this project.’

After CBW went bust, another company, Werneth Developments Limited, took on 24 of the housing plots including seven near-complete homes. Mr Malik, 49, briefly became a director of that firm to ‘facilitate the transfer’.

Fellow businessman, Saeed Ahmed, 57, a director of Werneth Development when it took over the land in 2021, is now among directors of Hafiz Construction and Management - granted planning permission for 14 new 4, 5 and 6 bed houses at the site in September.

Oldham Council's planning committee agreed to waive a requirement that Hafiz paid £4,000 for local improvement projects after the developer argued it would make its project ‘unviable’.

Mr Ahmed did not respond to requests for comment. 

It is not known how much a second company, Oldham Homes Limited, which took on the other plots, paid for its share of the site.

Locals living at around the site and at the small number of completed homes, did not wish to comment. 

Oldham Council had been seeking a third party to develop the land - formerly rundown terraces and a park - after missing out on funding from the New Labour government to revamp inner city areas in the 2000s. 

The tie-up with CBW was initially agreed in January 2014 when current Oldham West and Royton Labour MP Jim McMahon was council leader. 

Internal reports from Oldham Council show Mr McMahon's successor as leader, Jean Stretton, who later died in 2022, was warned about CBW’s finances in April 2016 - a year before the lease was signed.

At the time, an officer said ‘full accounts have not been submitted’ and warned: 'The finances of the company cannot be verified'.

The officer said ‘there are now concerns over the financial viability of the project’ amid rising costs. At the time, CBW declared it had received £529,000 in deposits from 18 purchasers.

The council was presented with options including cutting ties with CBW and finding an alternative developer, or seeking financial support from government agencies to help ensure the scheme could go ahead.

It is not known what information was subsequently provided to satisfy the council, which eventually agreed the lease in November 2017. 

CBW's accounts filed to Companies House for 2016/17 show the firm had only £20,000 of assets and net debt of £124,000.

After the land deal was signed, 2017/18 accounts showed CBW had stocks and cash of £1.57m but £1.7m of payments due within a year. No further accounts were published and the company was later declared insolvent, selling its assets in 2021 and finally being dissolved in 2022.

An Oldham Council spokesman said that 'community-led scheme' was 'intended to be the largest project of its type in Greater Manchester', with CBW chosen after 'the opportunity to lead the scheme was marketed widely across the community'. 

The council said the outstanding £125,000 owed by CBW was 'due in two instalments on completion of the project' but this never happened and it has 'no powers to go after it now the company folded'.

The council disputed Mr Malik's claim of an agreement to waive the remaining amount.

A spokesperson said: 'While the council is not responsible for any private financial arrangements linked to the scheme, we have provided support and advice to residents when concerns have been raised with us.'