A court also heard Gurpal Atwal swore and made racist comments to a man as well as using unlicensed drivers to ferry children to school.
Atwal, councillor for Oadby and Wigston in Leicester, was denied a licence to run a taxi firm in Leicester after a court heard a string of allegations, the Daily Mirror reported.
Loughborough Magistrates Court ruled the Leicester City Councillor was "not fit and proper" to hold a taxi licence.
"I was told your client is using unlicensed drivers on school runs and then he sat in his pants outside a swimming pool because he believes that's acceptable," Borough licensing enforcement officer Tracey Aldwinckle, said.
Further alleged misdemeanours were outlined to the court last Friday, including claims of racism and that Atwal swore at a man.
Anthony Schiller, defending, said there was "no indication" from any member of the public of aggressive or racist behaviour.
The court heard Atwal owned a 50 per cent stake in Handsome Cars, in Leicester, and is taking his former business partner to high court in regards to a sum of about 300,000 pounds.
"It's often said a business dispute can be worse than a divorce. You have to use the mythical scales of justice to make the decision," Schiller said.
Atwal denied the accusations, claiming they were "all fabricated".
"I am not a racist person. I treat everybody fairly. They [the statements] were all fabricated to discredit my character," he said.
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