District auditor Richard Lott said in a damning report released this week that the argument for keeping the housing council owned was not made and that council publicity material was persuasive rather than informative.
The investigation was launched after complaints from residents in property sold to housing association Somer Housing in 1998.
Before a council can sell its housing, residents must vote on if they want to keep the local authority as their landlord, or be transferred to a housing trust.
But the publicity material circulated to residents during a council-led campaign prompted the complaints.
Lott said: ‘In my view, not only was the publicity material in question persuasion rather than information, it was also published with that intention in mind.’
Lott added much of the publicity material sent to tenants ahead of the transfer vote breached the council’s duty to uphold the Code of Recommended Practice on Local Authority Publicity, which says comms must be informative rather than persuasive.
The council disagreed with the auditor’s report and said it believed it would win its case if it was taken to court. However, the auditor said he did not want to take the case to court over fears of wasting public money on legal costs.
Council comms and marketing officer Julia Dean said: ‘We do not accept there was anything wrong with the way the campaign was conducted.’
The District Auditor also criticises the council for the material it produced by way of publicity prior to the housing transfer.