A government investigation was launched following an allegation made to Staffordshire Police in 2010 over tendering processes at the council.

The report by the Department for Communities and Local Government auditors last October has now been released to the BBC under the Freedom of Information Act.

It criticised three building projects run by Stoke-on Trent City Council which were funded by more than £16m of taxpayers money.

Two of the projects – Excelsior Works and Just Mugs – aimed to provide new accommodation for businesses that needed to be relocated. The third project was to renovate part of Bridgewater Pottery.

The report said: “As a result of the police investigation there is evidence to suggest, that on the balance of probabilities, fraudulent activity has occurred in relation to the Excelsior Works procurement and [some of] the Just Mugs works.”

The report found “procurement documents were falsified” to increase the cost for work and an invoice for finished work requested three months before the Excelsior Works – a business park – had been completed.

A false invoice was also produced for demolition work not part of the procured contract for the former Just Mugs pottery works on College Road in the city.

Former owners Just Mugs sold the property more than ten years ago and are not connected in any way with its subsequent development.

The report also found an artificial increase in professional fees being charged.

The report also criticised work carried out on the Victorian buildings at Bridgewater Pottery, where it said there was some evidence to suggest a building certificate was produced before work had finished, but did not go so far as to allege probable fraud.

The report concluded “there have been serious systematic failings in the management of this project by the city council.”

Stoke-on-Trent City Council’s chief executive, John Van De Laarschot, who was not in charge at the time, told the BBC:  “It’s absolutely horrendous and totally smacks of systemic failings, not only within the local authority but with all the partner agencies that are working together.

“These are dark days within Stoke on Trent’s recent past.

“This is not something that we would condone or indeed something we would like to ever replicate on a go forward basis.”