Edinburgh City Council has been cleared in an investigation over its handling of an embarrassing row among directors at Lothian Buses.

A KPMG report said the council acted within proper procedure after the authority acted when its bus firm executives became embroiled in a public row related to leadership.

Council Leader Andrew Burns said: "KPMG's independent report provides a comprehensive analysis of events, demonstrating that the council, as majority shareholder, acted consistently and in accordance with the proper governance procedures set out in the shareholder agreement relating to Lothian Buses.

"We welcome its findings and now look to focus on the future continued success of Lothian Buses."

The review examined whether transport convener Lesley Hinds should have stepped in.

KPMG said: "We also examined the facts surrounding the request to appoint the transport convenor to the board of Lothian Buses shortly after the resignation of the chairperson of Lothian Buses.

"We note that a request was made for the transport convenor to be appointed on a temporary basis, period not exceeding three months, to the board of Lothian Buses at a board meeting, but this request was withdrawn at the same meeting when it was highlighted by the Senior Independent Non-Executive Director that this appointment could lead to a conflict of interest under the terms of the Transport Act.

"The transport convenor was then admitted to the board as an observer which is allowable."

"It could be argued that, under the terms of the Shareholder Agreement, the council should have had no involvement whatsoever in the grievance process which Lothian Buses followed, other than responding to a formal request for consent from the former chairperson.

"However we consider that this was unrealistic in the circumstances, given the seriousness of the issue."

The bus board overhaul prompted a wider "review of governance" of Transport for Edinburgh, which encompasses Edinburgh Trams and Lothian Buses.

Lothian Buses has been mired in an embarrassing boardroom dispute among four directors - chief executive Ian Craig and directors Bill Devlin, Bill Campbell and Norman Strachan.

That tussle ended with allegations made against Mr Craig, but an investigation cleared him of any wrongdoing.