A £275,000 donation by waste giant Viridor to a church linked to borough Liberal Democrats does not need to be investigated, a Sutton Council governance officer has said.

That is despite commissioning chief Jessica Crowe’s admission that if an allegation councillors “engineered” the company’s appointment as Beddington incinerator provider, in return for the cash, was true, the matter would be so serious it would have to be passed to the police.

However, she did recommend the authority produce a report showing councillors are aware of their obligations to uphold its code of conduct.

A council spokesman said: “There is no evidence of council malpractice and there are other regulators better placed to investigate the workings of bodies over which the council has no control.”

The Sutton Guardian has contacted both the Charity Commission and the Church of England regarding Ms Crowe’s report, which will be debated by the council’s standards committee next Wednesday.

A petition led by out-of-favour Liberal Democrat Councillor Nick Mattey alleges Sutton Council breached ethical standards, misled the public and “acted against the best interests of residents” in its dealings with Viridor.

It followed April’s reports of the donation by the company’s charitable arm, Viridor Credits, to Holy Trinity in Wallington.

The church was linked to prominent Sutton Lib Dems, including chairman John Drage, a long-standing friend of Viridor chief executive Colin Drummond.

Both Mr Drage and Viridor Credits denied wrongdoing when questioned for the report and Ms Crowe concluded that “[Mr Drage] has therefore not participated in making any recommendations in respect of making any grants”.

The church and his friendship with Colin Drummond were listed by Mr Drage as declared interests in 2012, when he was a councillor.

Holy Trinity has hosted Lib Dem action days and councillor surgeries. Mr Drage’s wife, Elaine, is listed as a volunteer on its website.

Mr Drage said: “I’m just very disappointed that Councillor Mattey managed to put two and two together and get 27.

“I have made it clear that I had nothing to with the application.

“They were perfectly entitled to apply, and Colin Drummond had nothing to do with Viridor Credits.”

Ms Crowe added in her report that any independent inquiry would not have statutory powers to force attendance by Mr Drage, a private citizen, or representatives of Viridor Credits.