A four-year probe into how Walsall Council dished out £42 million of government funding has ended – with no criminal activity uncovered.

Detectives were called in to review investigations by both West Midlands Police and the Crown Prosecution Service into allegations surrounding the distribution of Neighbourhood Renewal Fund (NRF) money. But a statement released today said investigators agreed with previous conclusions that there had been no criminal wrongdoing.

Former council employee Peter Francis received a record tribunal payout of more than £600,000 following his dismissal in 2005 after making claims of financial mismanagement within the regeneration department.

He had said the NRF money, allocated by the government but distributed locally, was not been spent in accordance with rules.

But a statement from West Midlands Police said: “The findings of the investigation were considered by the Crown Prosecution Service and a separate review of the investigation was carried out by the City of London Police.

“The use of Neighbourhood Renewal Funding was found to be in accordance with floor targets set by the Government and no money was stolen or is missing.

“Investigators have found no evidence of criminality in any other areas of the authority’s business which were brought into question.”

Walsall Council leader Councillor Mike Bird said he was relieved the saga had come to an end.

“The cloud of suspicion raised by these allegations has been lifted by this thorough police investigation,” he said.

“I am particularly pleased that the investigation was subject to an independent review by the City of London Police.

“This has provided further and final confirmation that there has been no criminal wrong-doing. The council can now continue to focus upon services.”

Chief executive Paul Sheehan said: “The council has given its full co-operation to this investigation.”