A FORMER councillor walked free from court yesterday having been cleared of all charges relating to his role as treasurer of a collapsed charity.

Judge Beatrice Bolton directed a jury at Durham Crown Court to return not guilty verdicts on the last two charges facing Charles Smith.

But she said that while the actions he was accused of appear not to be legally wrong, they are morally wrong.

Refusing to award defence costs, she told Mr Smith, 56, he brought the prosecution on himself by his accountancy practices while treasurer of Darlington-based Dial-a-Ride.

Judge Bolton previously described them as "off the wall in terms of professional accountancy".

Dial-a-Ride was set up to provide transport for the town's elderly and disabled in 1988. It became a limited liability company, with charitable status, and Mr Smith was appointed treasurer in 1995, the year he was elected to Darlington Borough Council.

Dial-a-Ride ceased trading, due to financial difficulties, in February 2002, with estimated debts of £5,700.

Mr Smith was subsequently arrested and interviewed on suspicion of theft and forgery of a letter to the charity's accountant, David Sanders.

The former restaurateur, of Woodland Road, Darlington, faced two charges of theft, plus forgery and using a false instrument, relating to the letter to Mr Sanders.

The theft counts were quashed by Judge Bolton in May, after an application by Mr Smith's then defence barrister, Jamie Hill, who said at the time: "A reckless mismanagement doesn't necessarily indicate an intention to steal."

Following the prosecution case yesterday, the judge directed the jury to return not guilty verdicts on the last two charges.

It was alleged Mr Smith wrote to the accountant to quell concerns over the financial running of the charity, purporting the letter to be from Dial-a-Ride chairwoman Rosemary Sandford, in April 2000.

However, Judge Bolton said that even if Mr Smith wrote the letter, it would not have prevented the accountant making further inquiries.

"It's a technical reason. It's wholly wrong to forge a letter in that way, but it's not a criminal offence.

"It's morally wrong, but it would appear not legally wrong."

Mr Smith chose not to comment after the hearing.

The investigating officer in the case, Detective Constable David Ripley, said he would not go beyond the judge's comments.