Questions have been raised over why a council bought a piece of land for more than three-times the purchase price it had been two years earlier.
A probe is under way over North Tyneside Council’s deal to buy land at the former Swan Hunter shipyard in a joint deal with One North East.
The deal saw the purchaset in 2009 for £9.2m, just two years after it had previously been sold for £2.5m.
Northumbria Police have begun enquiries into the deal after the issue was raised, a move which has surprised the local authority.
A council spokesperson said: “We are surprised that this has been raised with Northumbria Police as we are very confident that this land transaction in 2009 has been carried out perfectly properly.
“The transaction to purchase the former Swan Hunter shipyard site involved a joint venture with a number of major public sector partners, to unlock a 600-hectare site along the river corridor for future development and job creation to benefit borough residents.
“Both the conveyance and valuation were carried out independently.
“The final agreement was signed off and agreed by One North East.
“In addition our accounts are approved every year by external auditors.
“The council takes any allegations of fraud or corruption involving its activities extremely seriously and we will be pleased to assist Northumbria Police with any inquiry.
“North Tyneside Council will continue to focus on making sure we progress the redevelopment of this site and together with our partners are investing £100m to transform the former shipyard into an advanced manufacturing hub for the offshore industry, bringing thousands of new jobs to Wallsend and benefiting the wider area.
“With our partner developer Kier Property, we are making good progress with infrastructure works that are essential to prepare the site and attract subsea and offshore industries.
“This work includes upgrading roads, repairing the quay edge, working with major utilities and refurbishing the main office block as the Swans Centre for Innovation.
“Officers are in discussion with a number of businesses who are interested in locating to the site.
“Negotiations with some of these business interests are at an advanced stage but further information is restricted at this time because of commercial confidentiality.”
A Northumbria police spokesman said: “We’re aware of concerns around allegations of fraud and are carrying out enquiries to establish whether any criminal offences have taken place.”