A Scottish chief executive suspended from his post over a year ago after allegations of overpayments to senior managers has been allowed to retire and will not now be the subject of a public inquiry.

Derek Pollacchi, former chief executive of Central Scotland Healthcare trust, was suspended on full pay of£88,000 after an internal investigation alleged overpayments had been made to himself and other senior managers.

A spokesperson for the new Forth Valley Primary Care trust said that in January this year it had decided to hold a formal inquiry into the allegations to give Mr Pollacchi the opportunity to respond formally. But it has issued a statement saying that before the hearing being set up, Mr Pollacchi was diagnosed with a rare form of cancer of the tongue.

'Consequently, on advice from his doctors, Mr Pollacchi has sought retiral on the grounds of permanent illhealth. In light of this, the board sought legal and professional advice and concluded it could not proceed with a hearing.'

However, the board will now make public the findings of a committee of inquiry set up to look at issues raised by auditors.