Mr De Freitas said the council had made money on other investments

The leader of North East Lincolnshire Council is to face a vote of removal over the authority’s £7m investment in failing Icelandic banks.

The Labour and Conservative groups have joined forces to try to oust Liberal Democrat leader Andrew De Freitas and deputy leader Tony McCabe.

An earlier vote of no confidence succeeded against Mr De Freitas in July, but he refused to resign.

The council’s constitution allows members to vote for removal.

The Conservatives have backed the motion from Labour leader Chris Shaw with the vote due to take place at a meeting at Grimsby Town Hall on Thursday evening.

Tonight, metaphorically speaking, he’s [the leader] going to be dragged screaming from the chamber Labour leader Chris Shaw

If passed, Mr De Freitas will cease to be in control of the authority but can continue as leader of the Liberal Democrats.

A council meeting will then be held with nominations put forward for a new leader. Mr De Freitas would be eligible for re-election.

North East Lincolnshire Council is a hung council and has been run solely by the Liberal Democrats since May.

The authority is made up of 19 Lib Dems, 16 Conservatives, five Labour and two Independent.

Councillor Chris Shaw, leader of the Labour Group, said: “The leader has had the chance to go.

“Tonight, metaphorically speaking, he’s going to be dragged screaming from the chamber.”

In June, an Audit Commission report criticised the council for putting £7m worth of deposits in Landsbanki, Kaupthing Singer and Friedlander banks when they collapsed in October last year.

Mr De Freitas said he refused to resign because investments were not his responsibility.

He said at the time of the Icelandic banking crisis, the Conservatives were in a joint leadership with the administration but collective control had since broken up with the Conservatives taking up opposition.

“You can’t be a cabinet member and not accept decisions,” he said.

“More than 100 councils choose to invest in Icelandic banks but no single other authority has a situation where the leader is being asked to resign. What does that say about North East Lincolnshire?

“The fact is that day-to-day decision making is not the responsibility of the leader, we have to delegate to officers and investment policies are also set by full council.”

Mr De Freitas said the council’s portfolio of investments had generated £10.6m of earnings over the past four years.

He added: “What is going on is completely destructive and distracting for the council and it is not good for the area.

“No wonder people don’t vote when they see councillors behaving like spoilt kids.”