Not illegal as in 'criminal act which you can be arrested for, and in extreme cases go to jail as a result of'
Illegal in the sense of obviously dodgy and outside-the-rules practice which is then denied, justified and obscured, causing more trouble and expense to chase up than any one individual resident could justify
say...
a mayor deliberately parking the official limo on double yellow lines every time, knowing there is no way the CCTV guys will send a ticket, and even if they did, another bit of the council would pick up the bill.
a housing department hounding a seriously unwell adult for bedroom tax arrears, so they will stop opening their mail, and an eviction will follow. Knowing as an arrears case, they'll be voluntarily homeless, so council get a 3-bed back and the ex-tenant is off the housing list.
a social services department saying that because your granny can't produce her printed bank statements, she can't be assessed for the (means-tested) provision of an essential home care package 'at this stage'
the head councillor for planning being heavily involved in decisions regarding a scheme which is opposed by the residents' association. Which he also heads
telling social services that parents seem to be inventing their dc's diagnoses, despite these having been made by the NHS through the usual channels
(of the five examples above, one is an urban myth, one is from Private Eye, and the other three have happened to people I know well, who have detailed relevant paperwork to prove it really did take place like that)