The former chairman of the Co-operative Bank resigned as a councillor in Bradford two years ago after "inappropriate" content was found on his computer, the council has revealed.
Reverend Paul Flowers, a Methodist minister who chaired the Co-operative Bank for three years from 2010, is alleged to have bought illegal drugs as part of a newspaper sting.
He left the city council in September 2011, having served on it for almost a decade, citing personal reasons and increased responsibilities at the Co-operative Banking Group.
But a spokesman for Bradford Council said: "Inappropriate but not illegal adult content was found on a council computer handed in by Councillor Flowers for servicing. This was put to him and he resigned immediately."
Reverend Flowers, who has already apologised for doing things that were "stupid and wrong" - but without elaborating - has been suspended from the Methodist Church and by the Labour Party.
The substances said to be at the centre of the claims include cocaine and ketamine - a horse tranquilliser - used as a party drug.
The allegations against Reverend Flowers, which are the subject of a police inquiry, exacerbated pressure on Britain's biggest mutual which is having to explain the background to the bank's financial difficulties - largely a result of its merger with Britannia in 2009.
The Co-operative Group's long-standing chairman Len Wardle announced on Tuesday he was resigning with immediate effect after he admitted "serious questions" were raised by the drugs scandal.
Mr Wardle, who has held the position since 2007, announced last month that he was due to leave next May but he said it was now right for him to go straight away, having led the board that appointed Reverend Flowers.
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