Federal police are investigating possible criminality in the sale to the Commonwealth of a parcel of land near the Western Sydney Airport.
An auditor-general report found the federal infrastructure department did not show appropriate due diligence in paying $30 million for the 12ha Leppington Triangle, which was worth only $3 million.
It paid 22 times more per hectare than the NSW government spent on its portion of the land.
An Australian Federal Police spokeswoman told AAP on Friday the agency was conducting an investigation to identify potential criminal offences relating to issues identified in the auditor-general report.
“This investigation remains ongoing, and it is too early to speculate on potential outcomes, so no further comment will be provided,” she said.
Deputy Prime Minister Michael McCormack recently described the sale as a “good decision” despite it being “very much over the odds”.
The audit also found infrastructure department officials had engaged in unethical conduct and failed to ensure proper probity.
The department has since appointed an independent investigator to examine the land deal and staff conduct throughout the purchase.