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A former council leader 'shamefully' claimed he knew nothing about the sexual abuse of young boys in Rochdale, a bombshell report concluded today.

It also found the late politician Cyril Smith used his high standing to put pressure on people to keep quiet about abuse allegations and avoid prosecution.

From 1997 onwards Greater Manchester Police investigated allegations of physical and sexual abuse in residential homes, with the Lancashire Police file concerning Smith and a further witness statement submitted to the Crown Prosecution Service in 1998. The IICSA panel said the CPS branch crown prosecutor advised Smith - the hostel's honorary secretary - should not be charged despite coming to the view there was a 'realistic prospect of conviction'.

The child sexual abuse inquiry found a 'valuable opportunity' was missed to prosecute Rochdale's former Liberal MP during his lifetime in the late 1990s.

Richard Farnell, council leader from 1986 until 1992, denied being aware at the time of abuse occurring at the school for which he was ultimately responsible.

But the report found: 'In the light of other evidence we heard, we did not believe him.' Today, Labour suspended the serving councillor immediately after receiving the investigation's findings, with a party spokesman saying: 'The Labour Party condemns the abuse of children and any attempts to cover up these heinous acts.' He could now face a police probe into allegations that he committed perjury at the inquiry.

Smith was a prominent councillor before he represented the town from 1972 to 1992 in Parliament, and he was awarded a knighthood in 1988 for his political services.

The report found there were 'frank discussions at the highest political level about the rumours in circulation about him, with no obvious concern for alleged victims'.

A valuable opportunity was, therefore, lost to prosecute Smith during his lifetime, and for the complainants to seek justice.'It also noted that Smith's 'ascent to a position of considerable prominence and respect' was marked in 1988 with a knighthood for his political services.