One of Scotland's biggest councils has aborted a controversial £27.5 million security contract award after a legal challenge.

Labour-run North Lanarkshire came under intense political scrutiny last month after it said it would hand a major CCTV and security deal to a firm run by a friend of its former leader and owned by the family of a key ally of US President Donald Trump.

Now the local authority leadership has decided to retender the contract rather than face a court fight with an established business which was narrowly beaten in the initial procurement process.

The move has sent shock waves through the council's Motherwell HQ. There is no suggestion of impropriety but procurement at the local authority has become a highly sensitive issue since a major internal audit report in to allegations of corruption concerning council contracts two years ago.

A spokesman for North Lanarkshire Council said: “The council received a challenge to the award of this contract and sought legal advice about this.

"We were advised that this award could be open to challenge on the basis that we were not explicit enough that we would rely on parent company guarantees if necessary.

“To avoid a lengthy legal process which has the potential to be costly to the taxpayer, a decision has been taken to abandon the award of this contract. This is an internal technical issue and is in no way a reflection on any of the companies who submitted a bid.

“We have communicated with all bidders in accordance with procurement regulations and a new tender will be issued in due course.”

The council's powerful infrastructure committee approved the award of the contract to a business called Securus Group early in May.

It it did so after a highly unusual split vote, with opposition SNP members demanding a delay so officials could answer questions by a veteran Labour transparency campaigner, Tommy Morgan.

Securus is so new it has never filed any accounts and Mr Morgan wanted to know how long a business should have been trading before it would be considered suitable for a strategically important state deal.

Speaking at the committee, Mr Morgan said: “It is worth mentioning that some of these firms appeared in a well-documented internal audit report last year on corruption. I make no allegations here...but I seek answers.”

HeraldScotland:

Tommy Morgan

Securus Group narrowly beat rival SPIE Scotshield on both price and quality. Scotshield has a long history of selling to North Lanarkshire, securing some £18m in contracts over the years.

The former leader of the council, Jim McCabe, admitted to this newspaper that he was friends with Scotshield’s one-time owner, Tony Kane, and that his daughter worked for the firm. Mr McCabe denied helping friends, including Mr Kane, get contracts, declaring “I am not corrupt”.

The audit report, seen by this newspaper and sparked by a whistleblower's letter to The Herald, found “no specific evidence” that Mr McCabe had influenced procurement.

Mr Kane sold Scotshield to a business called SPIE in 2014. This March he became a director and chief executive of Securus, which earlier this year opened a new local HQ in a building formerly occupied by Scotshield.

The infrastructure committee was not told this. Nor where they told Securus is ultimately owned by Wall Street finance firm Muzinich & Co. This business is run by George Muzinich. Its president was Mr Muzinich's son Justin, 40, before he entered politics, masterminding President Trump's controversial round of tax cuts.

HeraldScotland:

George Muzinich

The legal challenge was lodged at the Court of Session in Edinburgh by one of the businesses competing for the tender, Boston Networks. SPIE Scotshield also bid for the work. Boston Networks, Securus and Spie Scotshield all had no comment.

Mr Morgan, however, welcomed the retendering. He said: "This development vindicates the close scrutiny of public contracts by elected members."