Police Scotland is to examine a secret report into alleged collusion between Dumfries & Galloway Council and the collapsed building company R&D, the Sunday Herald can reveal.

The report, compiled by the former Highland Council chief executive Arthur McCourt was commissioned by D&GC in 2009 in response to allegations that the council's planning department had "Conspired to corrupt the planning process by deliberately imparting misleading and untruthful information to elected members" and had "passed sensitive information [from a would-be data farm developer] to outside competing commercial interests".

According to records seen by this newspaper, the "competing commercial interest" is a reference to R&D Holdings the now liquidated parent company of R&D Construction, chaired by businessman John Hume. The latter company's receipt of a £77m contract to build 400 houses for Dumfries and Galloway Housing Partnership (DGHP), funded with £13m of D&G Council cash, is the focus of an ongoing Sunday Herald Business investigation.

To date, the contents of the McCourt investigation have never been made public or shared with complainants. A spokesman for the Council said on Friday that "The report has been requested by Police Scotland as part of a formal investigation, so it would be inappropriate to comment."

The report is not directly related to R&D's controversial securing of the housing contract, trumpeted by DGHP in 2008 as "Scotland's largest ongoing regeneration programme... [giving a] significant boost to the local building industry at time of national economic uncertainty." However, local campaigners have welcomed a potential police probe into R&D's relationship with the council and its social housing partners.

The collapse of R&D Construction in April 2011 left an £8m trail of debts to trade creditors, resulting in hundreds of workers being laid off and several further business failures amongst local SMEs and suppliers. Many of these creditors had effectively financed the later stages of the work, as they had been required by R&D to accept 90-day payment terms, instead of the usual 30.

DGHP, along with partners D&G Council and the Scottish Government, has admitted that it did not conduct normal due diligence on R&D prior to the award, even to the extent of examining the current state of its books, or requesting a standard bank reference. This was despite R&D Holdings having a £25m overdraft with HBOS and £29m in total debts at the height of the credit crunch.

DGHP's chairman David McMillan, a former senior policeman, last month absolved the housing association of responsibility for small business failures arising from its own lack of scrutiny of the financial fitness of R&D and its ability to complete the contract. McMillan blamed the local suppliers, saying they should have been "considered how they would protect themselves... especially at a time when the construction industry was suffering as a result of the global economic situation."

Meanwhile the Scottish Housing Regulator, which has consistently backed DGHP's position on the R&D contract, is expected to face tough questions about its dismissal of tenant and contractor complaints when it is recalled to the parliament's Infrastructure & Capital Investment Committee in June.

In a "restatement" of answers on DGHP sent to the ICIC convenor on 19 January after their committee appearance, SHR chief executive Michael Cameron and board member Anne Jarvie, wrote that "No additional public money was needed to complete the delivery of the houses originally awarded to the now insolvent contractor."

The SHR has declined to state its grounds for backing DGHP's claim that a building site could be abandoned for over a year while a new tender was issued to remediate and build 150 half-built or unbuilt houses without exceeding the project's original budget. The claim has been ridiculed by housebuilding experts, and appears to be contradicted by DGHP's own briefing to the BBC, showing a growth in completion cost from £11m in May 2011 to £15m in May 2012.

One member of the committee described committee's summoning of the regulator as "a stringent action in parliamentary terms", saying that it indicated "some dissatisfaction" with the SHR's stance on the DGHP affair, along with other responses, including that on policy on payments and benefits to registered social landlord governing body members and staff.

Iain Muirhead, the SHR's communications and strategy director said that the regulator "look[s] forward to giving further evidence on our work." to the committee

The SHR last week published a new "regulation plan" for DGHP repeating that the watchdog has found "no evidence to suggest that further regulatory engagement was required." However the plan includes a small-print disclaimer: "We rely on the information given to us to be accurate and complete, but we do not accept liability if it is not."