Police were called to investigate a deal that allowed two men to earn £1 million using public land.

Detectives found no evidence of fraud or wrong-doing over landfill tipping rights at Shoreham Airport.

But a scrutiny panel heard yesterday that there were concerns about how the deal was handled by Brighton and Hove City and Worthing Borough councils, which jointly owned the airport until it was sold in June.

Farmers Jeffrey Blundell and Ron Sweet made the money legally by charging firms to dump rubbish on two sites at the airfield between 2001 and 2005.

Officers struck a deal with the farmers to buy 70 acres of land west of the airport, which were needed for runway expansion. The farmers were willing to sell in return for tipping rights on another part of airport land.

The Audit Commission found no elected members were consulted and it was officers who gave the nod.

A panel of councillors from both authorities was set up to hear evidence from senior officers about how the deal was handled.

It will look at whether any of the money made can be recovered. It will also investigate ways of changing council procedures to ensure it does not happen again.

Alex Bailey, Brighton and Hove's director of strategy, said there had been concerns the council was not getting the best value out of the operation and so he felt it appropriate to call in the Audit Commission.

He said: "The report came back and it was a relief they found no evidence of fraud or corruption.

"They had involved the police in the investigation and the police decided there was nothing to proceed further on."

Hove councillor Jan Young asked why the councils did not realise the airport had commercial value as a landfill site.

Mr Bailey said: "Once or twice questions were raised about whether a peppercorn rent was sensible. The advice was that it was cost efficient."

Bob Bruce, principal projects solicitor, said at the time the deal was done he was working on the redevelopment of Hove library and spent only half his time in the legal department.

He said: "In the case of the tipping licence, I knew nothing about it until the time the council's internal audit was instigated. I didn't even know there was a file on it."

The panel will meet again at Hove Town Hall on October 31 and November 20 to hear further evidence.