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.
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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.