DETECTIVES investigating an alleged £300,000 fraud have arrested the former managing director of a North-East building firm.

Officers from the Northumbria Police economic crime unit searched the home of Peter Spoors, 51, the former boss of Miller Homes North-East, in Front Street, Frosterley, County Durham, on Tuesday.

They also arrested Mr Spoors' son-in-law, Nigel Greaves, 33, and searched his home in nearby Mill Lane. He was not employed by the company.

The officers took away computer equipment and paperwork, which will be examined.

Both men were released on bail. The investigation could take several months to complete.

The investigation is believed to have been launched after the company received the results of an audit by accountants KPMG.

Detectives are believed to be looking at alleged financial irregularities and the alleged misuse of company cheques, between October 1997 and January last year.

Economic crime unit spokes-man Detective Inspector Phil Butler said: "We have arrested two men in connection with a theft and fraud investigation centred on Miller Homes North-East.

"Inquiries are at an early stage and two people detained yesterday have now been bailed as the investigation continues."

It is understood that proceedings have been started on behalf of the building company and that Mr Spoors' assets have been frozen.

Mr Spoors, a father-of-three, left Miller Homes last year. He had been with the firm for six years and was initially a regional director when it opened its regional office.

The company, which has its head office in Edinburgh, is the biggest privately-owned house building, property development and construction firm in Britain.