COUNCIL staff pocketed £2million in a scam which saw pavements repaired on only one side of streets.
Four employees took kick-backs from a builder in return for awarding him lucrative contracts to fix them, it is alleged.
Alarm bells began to ring when locals noticed some streets had only been revamped on one side.
The five men were arrested after being filmed in secret in Harrow, North London.
It is understood the workers were sacked.
A source said: “The council received unsolicited covert video of interactions between council staff and one of its contractors.
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“The recordings suggest that those involved may have received inappropriate financial benefits from dealings between the two parties.”
Police said they were alerted in August last year.
A spokesman added: “We were made aware of allegations of fraud whereby payments were allegedly received by employees of a North London council in return for awarding contracts to provide council services.”
He said four council staff and a fifth man were quizzed and bailed under investigation.
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Local Tory MP Bob Blackman said: “The people in charge should be held to account for this criminal waste of taxpayers’ money.”
Harrow Council said it was cooperating with the police probe.