EX-MINISTER and MSP Frank McAveety has been kept off Labour's approved list of candidates for next year's municipal election amid a police probe into financial irregularities – as it emerges a businessman, once jailed for an alleged duty-free fraud, has been selected.

Labour’s Glasgow branch has ruled Mr McAveety will have to be re-interviewed following the news last week that a city councillor and former aide of the ex-MSP for Shettleston had contacted police about the use of public money at his constituency office.

Mr McAveety said he was “happy” to be re-interviewed, a move which he described as “procedural”. However, Labour sources said the re-interview plans “did not look good” for the former culture and sport minister.

At Thursday night’s meeting Labour also decided against approving the selection of Hanif Raja, a controversial one-time aide to the former Glasgow MP Mohammad Sarwar. The 63-year-old businessman, whose past sequestration raised concerns among local activists, had to go to court to get on the list in 2007, but still failed to get elected.

Meanwhile, Sohan Singh, who runs a string of restaurants and hotels in the city, was chosen as part of the same process which has led to around 20 sitting councillors on the Labour-run local authority being effectively sacked for not being up to the mark.

Mr Singh, a friend of Shadow Defence Secretary Jim Murphy, ex-MP and broadcaster George Galloway and Mr Sarwar, is expected to seek election in the east of the city. The businessman, behind the Bombay Blues restaurant and the Artto and Lorne hotels in Glasgow, was jailed in 1999 for an alleged duty-free tax fraud. He and two others were convicted of having dodged £1.6 million of tax on alcohol. However, Mr Singh’s conviction was overturned on appeal.

Earlier this year, the city council pulled out of an event organised by Mr Singh to promote business links with India after discovering shamed former leader Steven Purcell was involved with it. Mr Purcell had been promoting the event as part of his consultancy business.

Last week, The Herald revealed Strathclyde Police were investigating Mr McAveety after being contacted by Councillor Andy Muir, a close friend of Mr Purcell, who has been de-selected, over bonus and overtime payments claimed through his parliamentary allowances.

Yesterday, Mr McAveety, who has rejected Mr Muir’s claims, said: “I would be happy to be re-interviewed by Labour to clarify matters on their behalf. It’s crucial we have a strong panel of candidates for 2012.”

He also said that “allegations made by a former employee and rejected sitting councillor” were “totally without foundation”.

But a party source said: “It’s an obvious reason to re-interview but I can’t say it looks good for Frank. Even if he’s done nothing here you get the feeling that branch members might think this whole business isn’t worth it and ditch Frank rather than it dragging on.”

A Labour spokesman said: “A number of people are to be re-interviewed. When new information comes to light, potential candidates are re-interviewed as a matter of course.”

The Herald understands Mr Muir voluntarily revisited Stewart Street police office in Glasgow this week, while Mr McAveety has yet to be contacted by the force. It is understood Mr Muir has also insisted he acted on his own accord and has not been encouraged by others.

The Herald made several attempts to contact Mr Singh but he did not return calls. However, one friend said: “Sohan’s always struck me as a decent guy. I think he’s a better businessman than he is politically astute.”