It was in the public interest that we carried out an investigation which was as completely comprehensive and open as possible

Christine May Fife Council leader

The Central Fife MSP stepped down last November over the Officegate row, which centred on six sub-lets of his constituency office in Glenrothes.

He failed to declare income from the tenants while also claiming full Westminster expenses as an MP for the area.

However, it also emerged that Fife Council had given the charity funding after it had been wound up.

Opposition politicians said the protracted affair was an example of cronyism and demanded a full inquiry.

Audit Scotland found that the council had given the charity grants of �98,000, a quarter of which was handed over after its management committee was wound up.

'Sufficient evidence'

The watchdog expressed serious concern about this move, describing it as wholly irregular.

Ronnie Hinds, Audit Scotland's controller of audit, said there had been a lack of monitoring by the local authority.

Bur he added: "There is sufficient evidence to conclude that the funds provided by the councils were in all respects used for the purpose intended."

Henry McLeish: Resigned over Officegate

The document also highlights inconsistencies between the findings of the local authority's two internal inquiries, although it praises Fife Council's decision to carry out a second investigation.

Council leader Christine May has demanded an apology from those who questioned her integrity.

"It was in the public interest that we carried out an investigation which was as completely comprehensive and open as possible," she said.

"This investigation identified a number of serious irregularities in council procedure.

"But far from evading these issues, we both made them public and welcomed the opportunity to tighten up our practices."

Fiscal investigation

Scottish National Party's Tricia Marwick, who asked Audit Scotland to investigate, is now urging the Scottish Charities office to carry out a further inquiry.

Mr McLeish has previously condemned the treatment that he and his wife had received over the Officegate affair.

The Procurator Fiscal Service is investigating a complaint into the matter and the Labour leadership has delayed a decision on Mr McLeish's reselection as a candidate for next year's Scottish Parliament elections.