HERITAGE chiefs could launch a bid to reclaim the £440,000 paid for the fake Amarna Princess statue.

Bolton Council bought the Egyptian relic using grants from the National Heritage Memorial Fund and National Arts Collection Fund.

But town hall bosses discovered that the 20 inch alabaster statue was a fake last month and it has been impounded by officers from Scotland Yard.

Now the man who sold the piece of art could be forced to pay the cash he made from the sale back.

Stephen Johnson, National Heritage Memorial Fund Director, said: "We were extremely shocked to hear about this case. The National Heritage Memorial Fund has not been in this position before in its long 26-year history.

"When we give a grant, we give it for Approved Purposes, and if those purposes are not or cannot continue to be carried out, we may reclaim our grant.

"Whether we will be able to this will depend on the specific circumstances of the case. This is currently a police investigation and we are not in a position to comment further at this time."

A spokesman for the National Arts Collection Fund added: "We gave the grant to the museum to enable them to purchase the statue. We are now waiting for the outcome of the police investigation before we look at the matter further including what can be done about the money paid."

The purchase of the Amarna Princess in 2003 for £440,000 made headlines around the world.

It was thought that the sculpture dated back to 1350 BC and was a depiction of one of the daughters of the Pharaoh Akhenaten and his Queen Nefertiti, who was the mother of the legendary boy king Tutankhamun.

The previous owner of the statue, who was from Bolton, was never revealed but the local authority said at the time, that it was able to buy the Amarna Princess for well below its market value of £1 million because the owner wanted it to remain in the borough.

The National Heritage Memorial Fund paid the lion's share of the cost and awarded a grant of £360,767 to Bolton Council.

A £75,000 grant was also given by the Art Fund.

Bolton Council is carrying out an investigation into the matter after the police inquiry has been completed.

A house was raided in Bromley Cross and a workshop with equipment for making statues was discovered.

An 83-year-old man and his 46-year-old son were arrested and released on bail until May.

The Amarna Princess has been seized and is being examined by the Metropolitan Police Art and Antiques unit.

A suspicious Syrian Sculpture in the British Museum in London was also seized.