Michael Gove has ordered an “independent review” into allegations of “corruption wrongdoing and illegality” surrounding a Teesside redevelopment project that is part of Rishi Sunak’s freeports plans. But there was anger as Gove declined to act on calls for the National Audit Office (NAO) to lead the investigation, instead announcing it will undertaken by an independent panel that he will appoint, while the watchdog will have some limited role. There have been growing calls for a full audited inquiry into Teesworks and its redevelopment of what is Europe’s largest brownfield site and the UK’s largest industrial zone. The project, led by Tees Valley’s Conservative mayor, Ben Houchen, is meant to create thousands of jobs on land that was once home to the area’s 140-year-old steel industry. But the scheme has been bedevilled by accusations of corruption, cronyism and wrongdoing. The shadow levelling up secretary, Lisa Nandy, last week wrote to the NAO calling for an audited inquiry. This was followed by Houchen himself, who said he wanted an NAO inquiry to “nip allegations of wrongdoing in the bud”. On Wednesday Michael Gove, the levelling up secretary, said it was not the NAO’s normal role to examine individual local government bodies. But he is going to have an independent review looking into oversight of the South Tees Development Corporation (STDC) by the body led by Houchen, the Tees Valley combined authority. In a letter to Houchen, Gove says: “Since serious allegations of corruption, wrongdoing and illegality have been made, I will ask the panel to address these accusations directly and to report on the governance arrangements at STDC, including how decisions are made, as well as looking at the value achieved for the investment of public money on the site.” Nandy said it was “bizarre” that the NAO was not leading the inquiry. “The secretary of state’s letter refers to an organisation that doesn’t yet exist to hide the fact that there has been a complete breakdown in accountability on his watch. “The National Audit Office has the experience, capacity and independence to carry out an investigation, and Michael Gove has the power to order that investigation. Why, then, is he setting up a review where the terms and members will be chosen by him?” Houchen, who has become a poster boy for Tory levelling up, welcomed the inquiry. “I feel that an independent review is necessary to show investors, businesses and local people that there is no corruption, wrongdoing or illegality in what has become and continues to be an incredible project for jobs and investment in our region.” Andy McDonald, the Middlesbrough Labour MP, has spoken in parliament of what he sees as “truly shocking, industrial-scale corruption” in Teesside. On Twitter he suggested the NAO should investigate independently of government. With sarcasm, he said: “I’ve no doubt Ben Houchen is ‘looking forward’ to the outcome of this so-called ‘independent review’ of Teesworks.” The chair of an all-party parliamentary committee that is conducting its own review of freeports called on Gove to provide reassurances over the independence of the Teesworks inquiry. Darren Jones, the Labour chair of the business and trade committee, said: “We will want to understand the scope and resources made available to the independent panel he has announced and be reassured that, as a government-commissioned review, the examination will be led by independent experts and not directed by ministers.” The accusations of cronyism and corruption centre on a 90% stake in the company operating the site, which was transferred to two local developers, Chris Musgrave and Martin Corney, without, it has been alleged, any public tender process. The two men strongly deny any wrongdoing. The allegations have been made in Private Eye and the Financial Times. The latter said that companies controlled by Corney and Musgrave have earned at least £45m in dividends from the project in the past three years, with no evidence that they had invested in it to date. Teesworks has said that suggestion is “ignorant and mischievous” and the “context is far more complex”. Simon Clarke, the Tory MP for Middlesbrough South and former chief secretary to the Treasury, has accused Labour of trying to “shatter confidence” in the project. Welcoming the inquiry, he said: “The truth will come out and all those who have attempted to discredit a project that will deliver tens of thousands of good jobs for Teesside will have to answer for their cynical campaign.”