In a public interest report published last year, district auditor Stephen Malyn recommended that the council consider disciplining Mr Cox for his part in the unlawful re-awarding of a leisure services contract to KDS, Kerrier's DSO, in 1995.
KDS had been losing money and the council failed to obtain government consent for the contract award (LGC, 14 October 1999).
The auditor said Mr Cox's view that whatever advice he gave did not matter because members would not take any notice of him provided 'no excuse for his failure to provide clear advice'.
Mr Cox, who has consistently rejected Mr Maylyn's criticisms of him, said: 'I am delighted and relieved that the panel has concluded there was no case to answer and accepted that the criticisms of me were based upon inaccurate facts and several instances of unfair interpretations of those facts.'
The fate of three Kerrier members also heavily criticised by Mr Malyn has yet to be decided.
The auditor's report said Guy Mackenzie, chair of the KDS board, was the 'principal architect' of the illegal decision. He had sought to gain an 'improper advantage' for KDS and his conduct fell 'just short' of wilful misconduct.
Pam Lynes was found, along with Mr Mackenzie, to have manipulated another councillor into proposing not to award the contract to a private firm, Relaxion.
Stephen Barnes, chair of the amenities committee which took the decision, was also found to be at fault.
Kerrier is to appoint an independent lawyer to advise an ad hoc council standards committee investigating the trio's conduct. The councillors have until next month to make written submissions on the case for the committee to consider.