The report said the council did not listen to the community

The Audit Commission has warned Erewash Borough Council to improve or face intervention by John Prescott.

The first report by the commission found serious failings in the running of the authority highlighting weaknesses in the financial and management systems.

It also said there was a culture of fear among employees and a lack of communication with the community.

Nigel Smith from the Audit Commission said: "The council is poorly run. A lot of the council's partners in local business and the people of Erewash are quite cynical about the way it operates.

"They find it not to be open about the way it takes decisions."

Leader Cyril Stevens retired due to ill health

In a second report the conduct of former leader Cyril Stevens, who resigned last month on ill-health grounds, was heavily criticised.

The report found Mr Stevens used his position to achieve personal advantage including getting �800 in discounts on alcohol for private consumption from the council's own suppliers, over five years.

It also found he intervened inappropriately in day-to-day decision making and bypassed chief officers.

The council has launched a plan to address the negative findings and has promised to take take swift and decisive action.

Mr Stevens has refused to comment.