Police are looking into claims that the councillor wife of former County Hall boss David Parsons failed to declare she had a financial interest in a matter discussed at a meeting she attended.
Elizabeth Parsons has been referred to the police by Blaby District Council, on which she sits as a Conservative member, and is to be referred to the authority's standards committee over the issue.
The allegation is in relation to a district council meeting held on September 25.
Both Mrs Parsons and her husband, who is also a district councillor, were at the meeting.
Mr Parsons declared a pecuniary interest and left the room while a discussion took place on whether the authority should dispose of garage sites to make way for housing.
However, Mrs Parsons did not make a declaration and remained in the meeting.
The council voted to give seven of its garage sites to East Midlands Housing Association so 18 homes could be built.
Draft minutes for the meeting show Mr Parsons stated he had a pecuniary interest in the matter as the director of a company providing consultancy advice to "an involved party".
On their registers of interests, submitted to the council in October, both Mr and Mrs Parsons are listed as directors of a firm called Cor Nobile, Latin for "noble heart".
Mr Parsons is also registered as having a contract with a firm called Eco-Modular Housing.
A senior councillor who was at the meeting on September 25 said: "When we got to the discussion about the garages, David Parsons stood up and said he thought he had a financial interest and left the room.
"He didn't say what it was though, and he should have done. His wife didn't budge, she didn't say anything, but she stayed through the meeting.
"If he has a pecuniary interest, I don't see how she cannot have one too.
"I believe he should have taken her with him when he left, or she should have declared an interest herself.
"The purpose of a councillor declaring an interest and leaving a debate is they don't hear what is said."
The Mercury made a number of attempts to contact Mrs Parsons, but her husband said she was not available.
Mr Parsons told the Mercury it would be inappropriate for him to comment on the matter.
In a statement, Blaby District Council said: "Further to a meeting of full council at Blaby District Council on September 25, certain irregularities relating to declarations of pecuniary interest have been investigated by the council's monitoring officer.
"This matter relating to Mrs Elizabeth Parsons has now been passed to the police for their consideration."
A council spokeswoman said: "It should be made clear that we are not saying there has been a breach of the law, but in the interests of the council and all concerned, the matter has been referred to the police.
"The issue will also be referred to the council's standards committee."
Police confirmed they had received the council's report.
A spokesman for East Midlands Housing Association said it had been contacted by Eco-Modular Housing about potential work in the future.
The Mercury was unable to contact Eco-Modular Housing yesterday.
