Police have been called in to look at whether any criminal act was committed when a severance payment was made to a Gentoo executive without approval from its board.
The Sunderland-based social housing group has confirmed it has been in contact with Northumbria Police after it was revealed the pay-out was made, despite not going through a process where top members could scrutinise the deal.
While it told the Echo it has contacted the force, it reiterated a previous comment from its newly-appointed chairman and group board member Keith Lorraine OBE, who said: “We are unable to comment any further for legal reasons.”
An independent report has also been made by former Sunderland City Councillor Mike Tansey, who represented the Doxford Park ward.
Mr Tansey has campaigned in support of council housing and expressed concerns over Gentoo as it took on the council’s housing stock in 2001, when it was then known as Sunderland Housing Group.
He said: “I think the social housing situation in Sunderland is dire and this company was contracted to look after social housing - all my worst fears care coming to be realised.
We are aware of the concerns that have been raised and will look into whether any criminal offences have been committed.Northumbria Police
“It’s an absolute scandal that individuals could be paid money that has not been approved by a board.”
A police spokesman said: “We are aware of the concerns that have been raised and will look into whether any criminal offences have been committed.”
Gentoo has already said it is seeking legal advice as it tries to claw back the funds.
The company, which manages approximately 29,000 homes, came under fire from the Government’s Homes and Communities Agency (HCA) last month as it downgraded the organisation.
Its report said it “does not meet our governance requirement” and added there are “issues of serious regulatory concern.”
In return, Gentoo chiefs have said the criticism was labelled at one particular pay off - although no details of identity have been disclosed.
Gentoo is responsible for homes in South Tyneside, Northumberland and Redcar as well as Wearside and has recently appointed a new chief executive.
In 2015 it cut 330 jobs as part of a bid to save £18 million by March next year.