The Hills councillor Greg Burnett has stepped down immediately as mayor following allegations he embezzled $285,000 from his former employer.
He has denied any wrong doing, but the Liberal Party member will not be contesting The Hills local government elections in September.
In an emailed statement to his councillor colleagues tonight [Sunday] and obtained by the Hills News, Cr Burnett blamed an ''anonymous, malicious campaign'' against him for his reasons for standing down:
"In light of the recent allegations regarding myself and my character, pertaining to matters from four years ago, I have decided it's in the best interests of all to stand down as Mayor of the Hills Shire Council, whilst I clear my name.
''In recent weeks I have been the victim of an anonymous and malicious campaign, circulated by way of a 'dirt sheet', containing certain documents, some of which are defamatory, all of which attack my character.
''I deny these anonymous allegations and will continue to strongly defend my legal rights.
"Due to the impact on my family and my health I have made the difficult decision not to recontest the forthcoming local government elections.''
It's understood Premier Barry O'Farrell called for Cr Burnett's removal from the party on Friday.
Cr Burnett was working as the financial controller at Guardian real estate agency in Dural in March 2008 when the bank raised concerns that the signature on a $45,000 cheque had been forged. The cheque had been made out to Cr Burnett's private company Steelglow.
The week before being elected to council in 2008, Cr Burnett's then accountant Bob McCullough organised a confidential settlement, with Cr Burnett agreeing to repay the money he had allegedly stolen.
''I refer to our discussion and advise that Greg has misappropriated approximately $285,000,'' Mr McCullough wrote in a letter obtained by the Hills News. Cr Burnett would repay the money by selling his house, cashing in his superannuation and selling shares, the letter stated.
Even though preselection has not occurred, Cr Burnett was expected to be running number one on the Liberal Party's north ward ticket with Hawkesbury MP Ray Williams' son Ryan as number two.
In the 2008 council elections, both Cr Burnett and his number two candidate, Robyn Preston were successfully elected in north ward.
Read more tomorrow.