Liverpool Council has dismissed its Director of Regeneration Nick Kavanagh from his position with immediate effect.
Mr Kavanagh was arrested in December 2019 on suspicion of conspiracy to defraud and misconduct in a public office.
The arrest came as part of Merseyside Police's Operation Aloft, an investigation into building and development contracts in Liverpool that has also brought about the arrest of Mayor Joe Anderson.
Neither individual has been charged.
Mr Anderson has protested his innocence, while Mr Kavanagh has not spoken publicly since his arrest.
Mr Kavanagh was suspended from his top officer role following his arrest, but continued to pick up his £145,000 a year salary.
Last week, the city council's Appointments and Disciplinary Committee met over several days to deliberate and decide on Mr Kavanagh's position.
Today, the council's chief executive confirmed, in an email to councillors, that Mr Kavanagh's employment with the council has ceased.
Mr Reeves wrote: "I want to let you know that Nick Kavanagh is no longer employed by Liverpool City Council. His employment as Director of Regeneration and Economy has ceased with immediate effect."
The major decision comes with the city council in turmoil.
A government inspection report has now been handed to Local Government Secretary Robert Jenrick, who will make a statement to Parliament this week spelling out what level of intervention he will order in Liverpool.
Reports in the national press suggest he is poised to order a full takeover of the city council, which would see commissioners take on the day-to-day running of the local authority.
In his email to councillors, Mr Reeves said: "As you know, in recent weeks there has been an ongoing Best Value inspection of planning, highways, regeneration and property management functions by Max Caller CBE, on behalf of the government.
"We are expecting to receive the report into the inspection over the coming days.
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"It’s likely to make for difficult reading for staff in regeneration, and indeed the wider council, as well as for residents, stakeholders and investors.
"We must remain resilient and continue on the improvement journey that we have embarked upon."
Liverpool Council has been approached for a response.