An auditor-general report found the federal infrastructure department did not show appropriate due diligence in paying $30 million in 2018 for the 12 hectare 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 said the sale was a good decision despite it being “very much over the odds”.

Labor frontbencher Catherine King said it was important to properly scrutinise the decision.

“It’s absolutely vital, if we’re to have any confidence at all in the Morrison government’s billions of dollars that is going into Western Sydney Airport … we need to get to the bottom of what has happened with this dodgy deal, a dirty deal that has been done not so dirt cheap,” she told reporters in Canberra.

The audit also found infrastructure department officials had engaged in unethical conduct and failed to ensure proper probity.

“In the course of this audit it became clear that aspects of the operations of the department, both during and after the acquisition, fell short of ethical standards,” the report found.

The department has since appointed an independent investigator to examine the land deal and staff conduct throughout the purchase.

The audit found property owner Leppington Pastoral Company had suggested to the government the name of a valuer, which was agreed to by the department.

The company is operated by billionaire brothers Tony and Ron Perich, who last month described the price as “fair and reasonable value given the significance of the land to our dairy business”.