Corby Council has been accused of unlawfully selling land below its market value and costing the taxpayer millions of pounds.
The site at the St James industrial estate, where a new Tesco is being built, was sold to Greatline Developments for £82,031 in 2010.
But an independent valuation of the site valued it at between £8m and £9m.
Conservative councillor Rob McKellar told the Telegraph he believed the transaction was illegal as it wasn’t agreed by committee or the Government.
Under the Local Government Act 1972, if the undervalue of a land sale is greater than £2m it has to be approved by the secretary of state.
And Corby Council made a policy in 2008 that all undervalue transactions should be committee approved, but Cllr McKellar says this did not happen with the Tesco land.
Corby Council says the matter is being investigated by the Audit Commission.
In an email to Cllr McKellar, the council’s head of housing Steve Redfearn said the sale was authorised by the previous chief executive, Chris Mallender.
Mr Redfearn said: “I had the land valued by Savills in 2011 and they valued it at £8m with the benefit of the retail consent granted to Tesco.
“There is currently a third party expert determining the value of the adjacent York Trailers site, also part of the Tesco scheme, which the council also sold freehold to Greatline in 2010.
“The outcome of that determination will be a couple of months. However, the guaranteed minimum price for that land is £3.5m which is £774k per acre. Applied to the Soothills (Tesco) site that gives a value of over £9m.”
But Mr Redfearn said the loss on the land was not simply £9m minus the sale price.
He said: “One has to factor in a discount for hope value. At the most that would be 50 per cent giving on that assumed basis an undervalue sale of, say, £4m.”
Corby Council’s acting chief executive Norman Stronach said: “The matter is being looked at by the Audit Commission and we expect them to report in either August or September this year. We consider the recommendations made by the commission and agree appropriate measures to be taken.”