Auckland Council's development arm has been cleared of fraud by the Serious Fraud Office over the sale of a council building, but raised concerns about hospitality provided to Panuku chief executive Roger MacDonald.

Auckland mayoral contender John Tamihere asked the Serious Fraud Office to investigate the deal that saw the Civic Administration Building in the central city and surrounding land sold for $3 million.

Tamihere described the sale of the 18-storey CAB and 5000sqm of land off Aotea Square as "incompetence or corruption".

He told the Herald today the SFO's decision was "unusual" in how fast it came to its conclusion, and if elected would launch a full inquiry into the sale.

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Mayor Phil Goff said Tamihere's comments were "nonsense".

"The SFO has made it absolutely clear, and says Tamihere's allegation has no substance."

Goff said he was however concerned about MacDonald's acceptance of hospitality from Tawera Group chairman Mike Mahoney.

The successful purchaser of the CAB, Civic Lane Ltd, was owned by Tawera Group's chief financial officer John Love.

MacDonald had joined Mahoney for a day sailing in the Millennium Cup in January 2017 in the Bay of Islands, which included a private helicopter trip, a night's accommodation in a Russell motel and a meal.

The SFO said despite the gift being accepted after the CAB agreement was reached, its acceptance was "ill advised" as there was still clear potential for a "perceived conflict of interest".

"He should not have accepted the gift," Goff said.

"I was not aware of it. Perception can be as damaging as reality.

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"I am not saying it was dishonest, and it was a year after the agreement, but it was very unwise.

"I have expressed my views to the chair of Panuku, which have been passed on to [MacDonald] that I expect their policy to be tightened around accepting hospitality."

Panuku chairwoman Adrienne Young-Cooper said the board received notification from the SFO that, following Tamihere's complaint regarding the sale of the Auckland Council Civic Administration Building, it had no reason to suspect fraud, corruption or bribery on the part of Panuku, its employees or its agents.

"The board is pleased the SFO has confirmed there is no reason to further investigate Panuku in relation to this process."

Young-Cooper said the board accepted the SFO's suggestion that it should review the gifts and hospitality policy and procedures, and would appoint an independent party to complete it.

"The invitation was accepted after the decision on the CAB development had been approved.

"Although the SFO acknowledged that acceptance of this invitation did not impact any decisions made by Panuku, it did advise that it could create a perception of impropriety.

"MacDonald followed correct procedure regarding this invitation; both completing a gift declaration and seeking permission from the chair of Panuku's board before accepting.

"This information was provided to the SFO as part of our response on the
transaction.

"The policy in place at the time has now been superseded by Auckland
Council's policy, which Panuku now follows.

"The board of Panuku, a council-controlled organisation, takes conflicts of interests, real or perceived, extremely seriously and actively manages and reports all gifts, hospitality and potential conflicts on an ongoing basis, for all board members, the CE and staff."

Young-Cooper said when MacDonald informed the board of the gift it was given a value of $300 to $500, but this was before he was aware of the helicopter ride.

This had only become known on the morning of the trip, Young-Cooper said.

There would be no repercussions for MacDonald as he had followed all of the procedures in place at the time and had been given board approval, she said.

In a letter to Cooper-Young, the SFO's general counsel Paul O'Neill said "we do hold concerns in relation to a potential perceived conflict of interest involving the chief executive of Panuku Roger MacDonald".

"Specifically we were advised by MacDonald he had attended a sailing day in the Bay of Islands hosted by the chairman of Tawera Group, Mike Mahoney.

"As you will be aware, the successful purchaser of the CAB was Civic Lane Ltd which is owned by Tawera Group's chief financial officer John Love.

"The potential for a perceived conflict of interest is clear. Notwithstanding the declaration of the receipt of this hospitality and the disclosure of the potential conflict of interest it created, in the circumstances we consider that its acceptance was ill-advised," O'Neill said.

Tamihere said despite the SFO decision he still believed something "dodgy" had happened in the sale.

"I think it is most unusual for the office to come to such a quick conclusion, and I would like to see a preliminary investigative report, about why they came to that conclusion.

"I think there is no doubt there has been something dodgy. When I am mayor my integrity unit will be investigating."

Tamihere said the concern over chief executive MacDonald's acceptance of a gift was "small potatoes" compared to the building sale.