Mark Meredith was arrested by police on Friday
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Stoke-on-Trent's elected mayor has stepped down from some of his duties as he attempts to clear his name.
Mark Meredith, 43, was arrested on Friday on suspicion of misconduct in a public office and complicity in corruption while in public office.
The Labour politician, who has been bailed until June, said he was innocent and the allegations made against him were "politically motivated".
The authority's deputy mayor Mohammed Pervez will take over in the meantime.
'Unfounded rumours'
Mr Meredith said he had also asked to temporarily suspend his membership from the Labour Party to minimise the negative impact to the party.
In a statement, Mr Meredith said he welcomed the police action.
He said: "It is important that the unfounded and politically-motivated rumours about me are put to bed.
"I am innocent of any wrong-doing and I am confident that this investigation will show that."
The Labour Party has declined to comment on the ongoing police investigation but said it expected all its members to co-operate fully with police.
Second arrest
Mr Meredith will continue to serve in his constitutional role as elected mayor of the city but will stand down as chair of the executive and members board, Councillor Mohammed Pervez said.
He has given up his role with the appointments panel to recruit a new chief executive for the authority and as chair of the North Staffordshire Regeneration Partnership.
Stoke city councillor Roger Ibbs was arrested last month as part of the same inquiry. He stood down as a group leader on the council last week.
Mr Ibbs, who was leader of the Conservative and Independent Alliance and the portfolio holder for education, said he was arrested following a complaint he made to the council.
It is thought police have been looking at council proposals for a leisure centre.
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