Mr Winter said relationships at the council were at an all-time low
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The running of Doncaster council was badly affected by a feud between the mayor and the authority's former managing director, a report has found.
Former MD Susan Law quit the council in February 2007 after a long dispute with the town's elected mayor Martin Winter.
An Audit Commission report said the council's handling of the row exposed "weak standards of governance".
Tensions between the mayor and local Labour party "continue to hamper the effectiveness of the council", it adds.
It was those tensions which were partly to blame for the breakdown in the relationship between Martin Winter and Susan Law, district auditor John Prentice said in his report.
In 2006, Ms Law sparked a police inquiry into allegations about Mr Winter's involvement in a regeneration scheme.
Prosecutors decided there was no case to answer.
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The report describes how there has been a compete collapse of ethical governance
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Shortly afterwards, Ms Law faced allegations about her conduct and eventually left the council by mutual agreement with a £120,000 payout.
The Audit Commission report said: "The people of Doncaster expect, and are entitled to receive, the highest standards of governance but the council has failed to achieve those standards in certain instances.
"Individual members and officers I interviewed expect these standards to be achieved but the actions of a few members and officers, including the former managing director, fell short of those standards.
"For the council to move forward most effectively, I believe its new managing director, Paul Hart, must lead by example and ensure that the highest standards of governance are consistently practised at the council.
"While the mayoral system does give extensive power to the mayor, its effectiveness in Doncaster is reduced by the current breakdown in relationships."
'Build bridges'
Mayor Winter said: "The report describes how there has been a compete collapse of ethical governance and how member/officer relationships are now at an all-time low.
"Despite the appalling behaviour we have witnessed, we have continued to deliver Doncaster's exciting regeneration agenda.
"We now urge members of this council to work together so we can move forward for all the residents of Doncaster."
Mr Prentice said "To improve this situation, the mayor and key groups need to recognise that movement and concessions will be required from all of them.
"Even if the groups concerned indicate a willingness to build bridges, mediation may be required to establish common ground for future improvements in working relationships."
The council and its new managing director have been given a year to improve or face a separate corporate governance investigation.
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