Further criticism has been fired over the use of public money to purchase a crumbling town centre pub.

Middlesbrough Council bought the former Crown pub for £750,000 in February last year following a £460,000 valuation. An internal audit review, published last week, found no evidence of a full business case or negotiation on price prior to the controversial sale and questioned if it represented value for money.

Former Mayor Andy Preston has again defended the decision to buy the Crown, stating the “expensive” report was “a crock” and only implied “some staff [at the council] should have proceeded more slowly” with the acquisition.

At a meeting of the council’s audit committee on Thursday, Mr Heaphy said the report revealed “failings” which he said were in part due to cultural issues at the time and people “wanting things now” without going through the proper processes.

He also said it further exposed issues surrounding officers feeling unable to speak “truth to power”. As reported, one officer told the auditors the way the sale was progressed was “entirely consistent with the macho style of leadership in place at the time.”

Mr Heaphy said he believed lessons had been learned and it was his job to ensure the right culture and environment existed at the council to ensure correct processes were followed in acquisitions of this nature. “They are not intended to slow things down,” he said.

“They are intended to protect public money and give the public reassurance that we are providing that stewardship to the best of our ability.”

At Thursday’s audit committee meeting, Conservative councillor David Coupe said he was not on the Executive at the time but said he recalled issues contacting the previous owner of the Crown, who was based abroad until an opportunity arose for the council to buy it. In response, Labour councillor Matt Storey said: “The concern I have is that having an opportunity to buy it is not a reason to buy it and from my perspective and based on the information in the report, it was clearly the wrong decision to buy it.

“Whilst the opportunity may have been there, as we have seen in the report, any number of other elements were not there, such as a survey, such as any kind of policy or strategy in terms of how the council was trying to proceed to develop the town centre. There were any number of opportunities for elected members of the Executive, and the Mayor, to say, ‘why are we doing this, what’s the point of this?’

“We can’t afford to buy buildings just for the sake of it or with the hope that they may be developed in future by a development corporation which is nascent at best. You have to be more careful with taxpayers’ money. We’re the custodians of taxpayers’ money and we haven’t been good custodians in this case.”

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Mr Heaphy agreed both members and officers are “stewards of public money”, adding: “We have a duty to make sure that money is spent properly. There are proper processes to be followed here around creating a strategic case on why we want to make an acquisition, around a business case to support it, and around transparency in the process which is laid out in our processes for acquisition.

“Following those processes, I would expect to see proper negotiations to demonstrate the best consideration for the best value for money, I would expect to see a condition survey and I would expect to see a plan at the time of approval about what we are going to do it. All of those are written out in existing procedures and, frankly, were at the time, as far as I’m aware.”

Following the meeting, former Mayor Mr Preston said he believed the report was instigated by current council leaders and described it as “expensive” and “a crock”. He also said it was “great news” that the Crown will now be redeveloped by the Middlesbrough Development Corporation, adding: “Thank God that we managed to wrestle it from the foreign owners in time”.

Tees Valley Mayor Ben Houchen said the decision means they can now press ahead with regeneration in parts of Middlesbrough, which he said had been “neglected for far too long”. As reported, Levelling Up Secretary Michael Gove has now given consent for ownership of the former Crown to be transferred to the MDC, along with other public assets worth an estimated £14.7m.

Tees Valley Mayor Ben Houchen said the decision means they can now press ahead with regeneration in parts of Middlesbrough, which he said had been “neglected for far too long”.

In a letter to the Government last month, Labour Middlesbrough MP Andy McDonald had urged Mr Gove not to endorse the transfer of Middlesbrough Council assets “before it is clear that TVCA has fully resolved the governance issues identified by the Teesworks inquiry”. The central criticism of the report relates to systems of governance at the TVCA and the South Tees Development Corporation which it said did “not include the expected sufficiency of transparency and oversight across the system to evidence value for money”.

A statement from members of the Middlesbrough Labour Group said they were “appalled” by the decision by Mr Gove given the governance and transparency issues raised in the report relating to the TVCA, the parent organisation of the MDC, and described the move as a “smash and grab” of public assets.

“Many of MDC’s board are unelected and many have no relevant experience and yet this board will control a vast amount of taxpayers’ money and make key decisions for Middlesbrough’s future,” said the statement. “The governance at the MDC needs to be robust and transparent to match the weight of its responsibility.”