PRESSURE was growing last night for a full independent inquiry into

the ''Monklands Mafia'' affair after the Labour Party's own

investigation ignored key allegations of sectarianism, financial

mismanagement, and nepotism.

Labour Leader John Smith and Shadow Scottish Secretary Tom Clarke, the

area's MPs, have also come under renewed attack for refusing point-blank

to discuss the issue.

In its report, the Scottish Labour Party has ordered a major shake-up

of local party operations and admits Monklands District Council had left

itself open to criticism for the way staff were appointed.

But it has sidestepped the key issues of an alleged ''jobs for the

boys'' policy, and claims of sectarianism and financial ''impropriety'',

saying these issues were not within its remit.

The investigation was launched in September after growing public

concern over charges of bias, nepotism, and bigotry were made by

political opponents and by dissident members of the ruling Labour group.

It was claimed that local authority jobs went mainly to people favoured

by certain councillors and the predominantly Roman Catholic town of

Coatbridge was favoured for spending projects over Protestant Airdrie.

Four Airdrie councillors were disciplined after complaining of alleged

bias.

''The whole thing is a charade and amounts to a whitewash,'' said

local SNP councillor Neil Douglas yesterday. ''A lot of people will

sleep easier tonight after Labour's shallow and feeble attempt at

investigation. Some will feel vindicated, but the Monklands people will

not be fooled.''

Local Conservative chairman Gordon Lind and Dover MP David Shaw, the

main critic in the Commons, both immediately demanded a formal

independent investigation, and both claimed they were still receiving

information from anonymous sources about alleged abuses.

''I issued an appeal for people to come forward in confidence and

already there has been a positive response highlighting questionable use

of power,'' claimed Mr Lind.

Council leader Jim Brooks said yesterday that he agreed with the

general recommendations in the report, and many of them had been

implemented already. But he attacked those in his own party who, he

said, had conducted a vicious smear campaign against the council based

on lies, innuendo, and whispers.

''I call them the cockroach brigade. Show some light on them and they

scurry away. I am sick of newspapers running sensationalist stories

based on rumour and innuendo, of unnamed sources making allegations.

When you ask for proof or evidence to back up these allegations,

however, none is forthcoming . . . we have nothing to hide at all.''

Mr Brooks said the allegations had done great damage to Monklands at a

time when the council was trying to attract investment into the area.

The 35-page report does not name a single councillor or party official

and talks instead in general terms about modernising local party

procedures.

The only real criticism is levelled at the local newspaper, the

Airdrie and Coatbridge Advertiser, which is accused of going ''beyond

reasonable bounds'' in its coverage of the affair.

The report's recommendations include:

* Councillors should only be involved in the appointment of senior

officials.

* Provosts and council conveners should serve no more than two terms

of office and council committees should have a broader membership.

* There should be a more equitable distribution of committees among

group members, ''so that some do not become overburdened while others

may have little more to do than attend the full council meeting.''

Scottish Labour Party chair

woman Anne McGuire, who headed the inquiry, described it as an attempt

to ''ventilate local party democracy'' and denied that it was a

whitewash.

''I don't think the report is a cover-up,'' she said. ''If you wade

your way through the pages, it has dealt with the issues that were

properly the remit of the party. We have been quite firm in areas in

which we have no locus. There are statutory mechanisms available for

people who wish to make allegations.

''I have to say to you that the difficulty increasingly in the

Monklands area is that people are making allegations and refusing to

submit them to the scrutiny of statutory authorities.''

A preliminary inquiry by the Controller of Audit into the council's

books is under way and the council itself has appointed consultants to

look at recruitment procedures.

On job selection procedures, Mrs McGuire admitted: ''The council could

be open to criticism at the level of involvement that the councillors

have in the selection procedures at the lower echelons of council

officials. We have made no secret of that fact to the district Labour

group.''

Asked if they had identified a clique and were trying to break it up,

Mrs McGuire said: ''It is a considered move to ventilate the democracy

of the party.'' Pressed again, she said: ''There appeared to be a few

people holding many positions. And let me say quite clearly they were

democratically elected to hold these positions.''

Asked why they had not addressed the issue of sectarianism, party

secretary Jack McConnell said they had not found any trace of

sectarianism in their investigation. ''We are aware of significant

exceptions to that allegation, both in the council hierarchy and in the

local party. That allegation does not stand up that people are kept out

because they are Protestants. I would point out the dispute was between

members of the same faith.''

He was referring to the fierce row over the four Airdrie councillors

suspended after complaints that preference was being given to Coatbridge

over Airdire for capital spending projects. Of the 20 seats in the

council, 17 are held by Labour councillors, all of whom are Roman

Catholics. The other three are held by the SNP.

The report claimed the recommendations -- effective immediately --

would help ''restore credibility and renew confidence'' in the local

party, but critics felt that fresh allegations were likely as people

overcame their fear.

The public revelation that their local parties were both operating

under old-fashioned procedures which allowed a small caucus to wield

control must be an acute embarrassment for Mr Smith and Mr Clarke, but

they have continually refused to comment on the issue. Both were

consulted during the investigation and saw a draft copy of the report

before yesterday.