Public sector ethics is a serious business. But it's difficult to know whether to laugh or cry at the latest goings on in Sheffield involving a councillor, an escort agency and a licencing committee.

Bizarrely, the ruling Labour group in the northern city decided to stand by its decision to remove Cllr Neale Gibson from its licencing committee over an allegation that he was in some way involved with an escort agency – even when he was cleared of any wrong-doing.

Cllr Gibson, a member of the Labour group, had previously hit the headlines when he was accused of setting up a Twitter account under a different name and issuing offensive tweets against the city's mayor and a Green party councillor.

Then he caused a storm of outrage nationwide after tweeting his comment on a 15-year old girl who died of an allergic reaction after eating a Pret a Manger baguette that did not fully list its ingredients on the packaging. Cllr Gibson said she should have asked what the ingredients were.

In an attempt to defend his comment he said: 'I’m not saying it’s her fault. I’m saying that if you have a life threatening allergy it’s your responsibility to ensure that whatever you eat doesn’t contain something that’s going to kill you. I think people are far too trusting of food labels.'

In the latest episode the Labour group heard Cllr Gibson was connected with an escort agency, removed him from the licencing committee and set up an investigation. After due deliberation it found that the agency was a client of Cllr Gibson's accountancy firm, providing nothing more than secretarial services, and he was exonerated.

Cllr Gibson was cleared of the allegation, but the Labour supremos issued a statement saying the dismissal was 'based on a description that councillor Gibson’s involvement was more than just his firm acting as accountant and that the company was engaged in a broader range of activities' and that 'we continued with the decision to ensure that not only do we have complete impartiality but also the perception of complete impartiality during this period.'

It added that 'this does not reflect on the professionalism of the councillor in question or any of their actions.'

Cllr Gibson responded to the investigation: 'I would like to set the record straight in connection to the allegations that I am connected to an escort company.

'As the company secretary our sole obligation is to ensure the limited company is run legally and complies with the requirements of Companies House and the current limited company legislation, we have no other involvement with the company nor any financial involvement. I certainly have no personal involvement with the company.'

He added that he was not personally involved with the account, which was dealt with by a member of his staff.

Cllr Gibson told LocalGov he has been assured he will be back on the licensing committee next month so perhaps it will blow over and he will desist from any further unfortunate comments on Twitter.

But to an ordinary member of the public the whole business must appear confusing. What was the 'description' on which his suspension from the licensing committee was based, and who provided it? What precisely were the allegations?

Why, when he was exonerated of any wrong-doing, was he not immediately reinstated? Why did the Labour group statement cite 'impartiality' as a reason for continuing the suspension?

The absence of clear answers to these questions from the Labour group or from the council itself leaves room for speculation, gossip and rumour. It could lead to damaging comments about 'no smoke without fire.' More importantly, it creates an aura of secrecy and behind-the-scenes political manoeuvring.

When councillors act in a way thought to be unacceptable, or against a code of conduct, or illegal, it should be dealt with swiftly, clearly and openly. The rules of natural justice should apply.

Otherwise, the principle that justice must not only be done but must be seen to be done risks being flouted and eventually forgotten. And that would be in no-one's interests, least of all the reputation of local government itself.