A WATCHDOG has found no evidence of wrongdoing over Durham City Council's controversial Millennium City land deal.

But District Auditor David Parkin has criticised aspects of the council's handling of the deal and said it could have got the land cheaper if it had bought it earlier.

Rumours about the deal, between the council and local businessman Robert Fulton Senior, led to a seven-month fraud squad inquiry.

Mr Fulton and council chief executive Colin Shearsmith were arrested on suspicion of defrauding the council but the probe ended with no charges being brought.

The deal centred on the car park at the back of The Advertiser's rented offices in Claypath, which the council needed for its £25m Millennium City development, part funded by the Millennium Commission.

The car park and office were owned by British Gas but were bought by Mr Fulton in 1998.

The auditor says the council, which knew in 1997 it might need the car park, acquired it from him in 1999 in exchange for property valued at £825,000 that it owned. Mr Fulton also paid the council £375,000.

The auditor says that he found no evidence of wrongdoing by either Mr Shearsmith or Mr Fulton.

The land acquired a 'ransom value' because it was vital to completion of Millennium City.

"I understand that Mr Fulton paid £300,000 for both the land and the premises. He received £450,000 from the council for the land alone within a period of less than two years."

The auditor goes on to say that "the council might have acquired the land at a lower cost had it acted earlier to make the purchase or had a decision to purchase both the land and the premises been taken.

"However, uncertainty over the final project design, the conditions for grant funding and the council's limited financial resources appear to have made such decisions difficult.''

Mr Parkin, who said the land values were confirmed by the District Valuer, said he was concerned about 'lack of involvement' of councillors when major decisions were made.

Mr Parkin's recommendations include keeping councillors fully informed on 'all matters of significance,' particularly on major projects, and giving them greater input.

Mr Shearsmith said: "This report from the District Auditor draws a line under this issue.

"I acknowledge the comments made by the District Auditor within the report and his recommendations for the future.

"Even though councillors took all executive decisions in this project they are already being given more opportunities to be involved with major matters at strategic level as part of the comprehensive modernisation of the city council."