Mayor Graeme Outerbridge and his council have been stripped of their powers after the governance of the Corporation descended into “complete disarray”.

Senator Michael Fahy, the Minister for Home Affairs, announced yesterday that he had taken temporary stewardship of the Corporation of Hamilton with Cabinet’s approval.

The decision follows a series of council controversies that culminated last week with five members calling on Mayor Graeme Outerbridge to resign over what they described as his “illegal and unauthorised” handling of the $18 million loan for the Par-la-Ville hotel development.

Mr Outerbridge has denied any wrongdoing and maintained he always acted with the appropriate authority.

Last night Alderman Carlton Simmons said many council members were stunned by the Minister’s reasons for assuming stewardship.

He said: “We were not stunned because the Minister took stewardship but because of the reasons he gave for doing it.

“We called for a meeting with the Minister to inform him of illegal activities we say were committed by the Mayor with the $18 million and without the consent of the council. We wanted to inform him of the dire financial consequences this will have on the Corporation and that is why we asked the Mayor to resign.

“But instead of listening to us the Minister has simply pursued Government’s agenda and taken stewardship of the Corporation. As an elected official that is very disheartening.

“From here I intend to take every step to preserve the Corporation of Hamilton so that free and open elections take place later this year. Any person running for city office should have a clear and proven track record of community service and be vested in the city.”

Responding to the claims Sen Fahy said: “The concerns raised about Par-la-Ville were one of a number of other items that were alleged during the meeting.

“All of these things will be looked at carefully to get a better understanding of what has and has not been done properly at the Corporation of Hamilton.

“There has never been an agenda to take over the Corporation of Hamilton. This decision was not made lightly. It is regrettable and unfortunate. Such allegations are deliberately inflammatory and have no foundation in reality.”

He told yesterday’s press conference that Mr Outerbridge had been “supportive” of Government’s decision.

Mr Outerbridge told The Royal Gazette: “The council was at an impasse. I am not going to get into the details of the Par-la-Ville loan except to say I always acted legally and with the appropriate authority. That is just a side show.

“There has been a long running internal battle over governance issues and it has been a very challenging administration.

“I hope there is a way through this stewardship and members reflect on some of the issues that have caused this impasse.”

In the meantime chief operating officer, Edward Benevides, will continue to run the day-to-day operations of the corporation. Major financial or operational decisions will be overseen by the ministry.

Sen Fahy said: “The current council will have no authority to make decisions, pass any resolutions or interfere with the day-to-day operations of the corporation, although I will continue to consult with the mayor and the council during the period of temporary stewardship.”

This is the second time that Sen Fahy has taken stewardship of the Corporation of Hamilton.

Between December 2013 and March 2014 Government prepared a Code of Ethics and Conduct, a Municipal Council Meeting Guide, and provided financial instructions to help the corporation manage its finances.

Sen Fahy added: “There has been no improvement in the overall management and administration of the corporation’s affairs, and this has caused me to have continuing grave concerns over the corporation’s ability to function properly.

“The governance of the corporation is seemingly in complete disarray, with relations between the council itself, as well as certain members of the council and the mayor deteriorating to the point of them making open threats and allegations of racism and maladministration, as well as engaging in acts of intimidation.”

The next Corporation of Hamilton elections are due to take place in mid-May. Mr Fahy did not rule out the possibility that the stewardship could continue until then.