The former chief executive of the Serious Fraud Office was handed a "golden parachute" of more than £400,000 after taking voluntary redundancy from her job.
The National Audit Office ruled that the payoff package given to Phillippa Williamson was "irregular" and said it was qualifying the SFO's annual accounts. However, the SFO said it had taken legal advice which concluded the money could not now be clawed back.
The chairman of the House of Commons spending watchdog said she was "astonished" that the SFO had agreed to the severance payment. Ms Williamson unexpectedly took voluntary redundancy last April, just days before the new SFO director, David Green, took up his post.
The NAO disclosed that on her departure she received what was described as a "special severance payment" of £15,000.
On top of that, her severance agreement provided for £407,000 to be paid into her pension pot to cover the additional costs of her early departure.
Under Whitehall rules, the severance payment required advance approval by the Treasury as it was "in excess of contractual amounts", while the pension payment should have been approved by the Cabinet Office. The NAO said it could find no evidence of such approvals being sought.
It also said there was no evidence that the SFO followed due process in instigating voluntary redundancy, such as determining whether alternative positions within the Civil Service could be found. The chairman of the Commons Public Accounts Committee, Margaret Hodge, described the payments as "completely unacceptable".
"The CEO [Ms Williamson] and SFO sealed the terms of this sweetheart deal outside of official Treasury procedures," she said. "Despite now believing this payment to be irregular, the SFO is unable to cancel it or claw back the cash. The SFO showed a total disregard for taxpayers' money when they wrote out [this cheque] to the CEO and failed to provide valid justification for the payment."
The SFO said that when Mr Green took over, he sought "legal advice as to the enforceability of the agreement and notified the National Audit Office of his decision not to seek retrospective approval from HM Treasury of what he considered unjustified expenditure".
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