FORMER Darlington Football Club chairman George Reynolds last night vowed to clear his name following his arrest on suspicion of money laundering.

Mr Reynolds, who had £500,000 cash in his car when it was stopped in a police operation, said: "They can do what they like. They know and I know I am whiter than white."

As The Northern Echo revealed yesterday, Mr Reynolds, his cousin Richard Tennick and personal assistant Ian Robinson were all arrested on Monday afternoon.

Officers from the Regional Assets Recovery Team, based at Durham Police headquarters, will this morning apply to retain the £500,000 while investigations are carried out.

The police application, to be made at Darlington Magistrates' Court under the Proceeds of Crime Act, involves half a million pounds in bank-notes recovered when Mr Reynolds' car was stopped at High Etherley, near Bishop Auckland, County Durham.

Mr Reynolds and Mr Robinson, both from the Wear Valley area, and Mr Tennick, from North Yorkshire, were taken to Bishop Auckland police station for questioning.

They were held in cells and individually questioned before being released seven hours later on police bail.

Mr Reynolds went to police headquarters at Aykley Heads, Durham City, yesterday, taking documents he said would clear his name.

Outlining the events leading up to his arrest, he told The Northern Echo how he had struck a deal with the Quakers' new owner, the Sterling Consortium, which "took over all the liabilities, debts and personal guarantees I gave on behalf of the club".

The agreement, he said, also included Sterling buying his lavish Witton Hall home at Witton-le-Wear, and much of its contents.

As a result, he said, last Wednesday the solicitors firm of Cobbetts, which represents Sterling, issued him with a banker's draft in part payment for the hall.

"Mr Robinson travelled down to Leeds to collect the draft and the money was deposited at the Darlington branch of the Co-operative Bank," he said.

Mr Reynolds described how he had gone to the bank on Monday and withdrawn £500,000 from his account.

"All my life I have dealt in cash and this money was legally transferred to me with all the relevant payments made on it such as stamp duty," he said.

"The money is mine and I am perfectly entitled to take it out if I wish. The police described it as a large amount, but for someone like me who is used to dealing in millions it is small."

The police actions, he claimed, were a warning to everyone.

"It seems that you run the risk of being accused of money laundering if you choose to withdraw large amounts of money from your account - it's disgraceful."

Yesterday, Tim Cross, a partner at Cobbetts law firm, confirmed that the Sterling Consortium had undertaken to settle a number of liabilities and personal guarantees given by Mr Reynolds on behalf of the football club.

He also said that the sale of Mr Reynolds' home had been part of the package and confirmed that a banker's draft in part-payment had been issued to the former football club owner.

The agreement, he said, between Mr Reynolds and the Sterling Consortium had been drawn up in the presence of lawyers and sanctioned by a High Court judge sitting in Leeds.

It allowed Darlington FC to escape the threat of liquidation and ended months of uncertainty for the club, which was plunged into administration with enormous debts on December 23.

Mr Reynolds added: "I have not the slightest doubt that I will be cleared of this ridiculous allegation.

"But I am seriously concerned that two men who have never been in trouble with the police in their lives have had their homes turned over and feel their reputations have been badly damaged by what they have been put through."

After handing over the documents endorsing the Sterling Consortium deal, Mr Reynolds said he was confident "we will be totally cleared".

He revealed, however, that he had been informed by the police that they intended to retain his £500,000 until at least November to allow time for further investigation.

"If that's the case, so be it. But it seems to me they could sort this out in minutes and I think it is terrible that even though I have done absolutely nothing wrong I am being hounded."

When asked if he would be attending the court hearing this morning, Mr Reynolds replied: "I wouldn't miss it for the world and I will be accompanied by a barrister and a solicitor."

Detective Sergeant Martin Fleming, of the Regional Assets Recovery Team, confirmed that all three men had been released on police bail pending further inquiries.

Durham Police declined to comment further.