THURROCK Council and Essex County Council are being investigated over how a £611,000 grant to improve the Mardyke Valley has been spent, the Gazette can reveal.
The councils were awarded the grant by the Heritage Lottery Fund in 2009 for the restoration of the valley.
The land regularly floods, sparking concerns for the welfare of horses grazing there.
In January, the Gazette told how people power had forced Thurrock Council to act.
It vowed to move 40 horses immediately after campaigners took just five days to gather a 9,000-strong petition. However, the animals are still there.
Now the lottery fund has confirmed an investigation is taking place over how the land is being managed.
The 2009 grant was given to pay for the management of the valley over ten years.
If Thurrock Council is found to have breached the grant contract, the lottery fund can claim back some, if not all, of the cash.
A lottery fund spokesperson said: “We can confirm investigations are ongoing with both Essex County Council and Thurrock Council regarding delivery of the land management plan.”
A Thurrock Council spokesman said it was co-operating with the lottery fund, but would not talk about when the horses would be moved.
He added: “There are records of our active management and investment in the project and we are confident this meets the overall requirements of the management plan.
“However, the council acknowledges excessive rainfall has affected the grazing area.”
A spokesman for Essex County Council said it had been responsible for applying for the funding, but management of the land rested with Thurrock Council.