THE chief executive of a North-East council has defended the organisation against allegations of fraud, racism and bullying.

George Garlick, chief executive of Stockton Borough Council, rejected allegations that the authority had claimed hundreds of thousands of pounds in Government funding by submitting false figures.

Mr Garlick was speaking yesterday at the industrial tribunal in Newcastle of Jane Knox, a former head of communications, who is claiming unfair dismissal.

Mr Garlick said that he stood by internal and external district audit investigations that could not substantiate her allegations of fraud.

He said: "We were concerned at the council that very broad and serious allegations were being made against a number of council officers without any supporting detail.

"We said if they found evidence of fraud they should inform the police and take whatever action necessary."

Ms Knox, 52, of Ingleby Barwick, near Stockton, said she felt intimidated during a meeting with Mr Garlick on May 9, 2003, to discuss the council's new corporate identity.

She said he shouted at her, threw her report on the table and called a representative from a local design company "a smarmy little Itie in an Armani suit".

Mr Garlick said: "It is inconceivable that I would have said that. It is a racial slur and I am highly sensitive to these issues.

"I would recall if I had started shouting or throwing things. I can't recall either of these things happening."

Four days after the meeting, Ms Knox was diagnosed as suffering from anxiety.

She said she was bullied by deputy chief executive Anthony Gardner, and also said Mr Gardner deliberately misled members over corporate identity by not consulting all political parties before the 2003 election.

But Mr Garlick rejected this, saying: "Quite simply, as with all contentious plans, we do not place them in front of cabinet because they are likely to fuel the political issues.

"It was decided to put them before the new council after the election."

Mr Garlick said that he had asked Mr Gardner to apologise to public relations officer Nikki Riddle, a member of Ms Knox's team, following a confrontation between the two in November 2002, which resulted in Ms Riddle becoming upset and taking six months off work with severe psychological distress.

Ms Knox's contract was terminated in September on the grounds that working relationships with officers had irretrievably broken down, and she left the council on December 31.

The tribunal continues.