MARK James, chief executive of Carmarthenshire Council is to face no further police action.
An investigation was carried out by the Gloucester Constabulary after audit reports flagged up “unlawful” payments made by Carmarthenshire Council.
But it has been confirmed by Dyfed-Powys Police that the investigating force has found no evidence to suggest a criminal offence had taken place.
A spokesman said no further action would be taken as a result.
A statement has since been released by council leader Kevin Madge.
"I am pleased that the police have concluded that there is no evidence of any criminal wrongdoing,” he said.
"I was always one hundred per cent sure that this would be the case, but it is in everyone’s interest that this has been looked at independently and that the public have now been given the reassurance that they need and deserve.
"I hope that everyone will now accept the outcome of this totally impartial investigation and that we can all return to focussing on what matters most – providing good quality services for the residents of Carmarthenshire."
A Dyfed-Powys Police spokeswoman said: “On January 30, 2014, three Public Interest Reports were published by the Wales Audit Office into matters relating to Carmarthenshire and Pembrokeshire County Councils.
“Following this, Dyfed Powys Police decided that the matters should be investigated ‘in the public interest’ to ascertain whether or not any criminal offences had taken place.
“Due to the close working relationships and partnership arrangements that exist between Dyfed-Powys Police and both local authorities, it was not appropriate for the force to carry out the enquiry.
“As such, the matter was referred to Gloucestershire Constabulary who agreed to undertake the investigation.
“Gloucester Constabulary have now completed their enquiries and have confirmed that following an objective and independent analysis of the evidence, they did not find any evidence to suggest that any criminal offences had taken place.
“On the basis of this, the police will be taking no further action in relation to these matters.
“Both local authorities have been advised of this decision.”