Sohan Singh, a member of Glasgow's ruling Labour administration, has been issued with a written warning by his own council after Strathclyde Police called on licensing chiefs to take action against his Lorne Hotel in the city's west end.
Police complained that, in breach of alcohol laws, staff had not been trained, management structures were non-existent and staff were unable to help officers access CCTV footage following a string of assaults at the venue.
Officers complained staff at the hotel could not give any contact details for managers when the police called on several occasions and that one supposed manager worked in a newsagents facing the hotel.
During the meeting it also emerged that Mr Singh was employing the man from whom he had bought the hotel for around £7.5 million, who had his assets frozen following the deal.
Archie Sharif sold the hotel to Mr Singh at a loss of about £4m last year but was apprehended by HMRC after he attempted to move money to a bank in Pakistan from the sale.
Lord Brailsford froze the businessman's assets under proceeds of crime laws late last year, as well as freezing the sale of Sharif's home in Newton Mearns, East Renfrewshire.
Just before the sale to Mr Singh, HMRC petitioned to wind up Sharif's trading company Lorne Hotel Glasgow Ltd and a liquidator was appointed.
Mr Singh failed to appear at a meeting of Glasgow's licensing board yesterday, to the obvious irritation of councillor colleagues on the body, with the company represented by Mr Sharif.
The Herald revealed during the summer how Mr Singh, a well-known restaurateur, had been operating without a licence as a landlord for flats he had bought from the council for just £1 a decade earlier.
Mr Singh had already been selected as a Labour candidate at the time and was operating unlawfully despite warnings from the council leader "rogue landlords" would be fined £50,000. He resigned from his ceremonial role as a city bailie – essentially a stand-in Lord Provost – as a result.
The latest brush with the authorities over failure to adhere to legislation will heap more embarrassment on Labour, with many in the party uneasy about Mr Singh's selection as a candidate.
The 58-year-old was jailed along with two other men in 1999 for a £1.6m duty-free tax fraud, but his conviction was overturned on appeal.
At yesterday's meeting, board chairman and Labour councillor Malcolm Cunning said: "It seems there was a laxity in management, which existed on paper but not in reality."
Archie Maciver, Mr Singh's legal representative, acknowledged the shambolic management but said this had been resolved with the installation of Mr Sharif as manager.
The Lorne was the venue for the wake of notorious gangland figure Kevin "Gerbil" Carroll, who was murdered in 2010.
It was also where Stephen Purcell, the shamed former Labour leader of Glasgow City Council, held a party to celebrate the Crown Office's decision not to prosecute him over alleged corruption and drug use.