GWENT Police's contract with a vehicle recovery company led to massive overpayment by the public for seven years, according to a damning inquiry.

The contract allowed Walls Recovery Service, of Newport, to charge motorists at unspecified rates, district auditor Paul Griffiths said today.

His report states: "Heddlu Gwent Police has failed in its duty to protect the interests of the public.

"The public is likely to have paid many thousands of pounds in recovery and storage charges which were not levied in accordance with the contract."

The report also slammed the department of Gwent county council which negotiated the contract on behalf of the police for taking "inappropriate and unethical commission". Walls recovered and stored vehicles involved in breakdowns and road traffic accidents, as well as stolen, obstructive and police vehicles.

From July, 1994 to June, 2001 it is estimated the public paid over £3m to Walls, who received a further £600,000 from the police.

The contract operated during the years Tony Burden and Francis Wilkinson were chief constables. The current chief constable, Keith Turner, raised his concerns in the year 2000 which led to the authority inviting scrutiny from the district auditor resulting in today's report.

Local contractors and members of the public have campaigned vigorously against the deal since 1994.

The auditor said the contract broke EU regulations and illegally disqualified other companies from the tender process.

Mr Griffiths said: "The contract was so loose and lacking in detail that both the recovery operator and sub-contractor were able to impose charges as they deemed appropriate for much of the work involved."

He said over the contract period, Walls increasingly labelled recoveries as costlier "specialist" operations. And he said the sub-contractor used for north Gwent overcharged the public for its recoveries.

He said he found it "difficult to understand" how invoices could have been authorised and passed for payment by Gwent Police finance department.

The report recommends seeking legal advice to recover all overpayments. No blame is attached to the contractor Walls. A spokesman said: "We recognise there were serious mistakes in the way the arrangements operated. Errors on our part arose because of genuine mistakes and misunderstanding.

"We are happy to recompense any members of the public if the police can tell us their names. We have repeatedly asked for this information. We refute any suggestion of dishonesty. A criminal inquiry in 2001 found no evidence of any wrongdoing."