|
- Deloittes publish report on Barnet's missing £27 million
- No money has been returned
- Councillors exonerated
"89% per cent of the deposits between 2006 and 2008 contravened the Councils TMS in 2006/7 and 2007/08 due to deposits being taken out with a counterparty with an Individual Rating below A/B. These deposits include the Icelandic bank deposits made in the period from November 2006 to September 2007". - 4.4 Deloitte's report
News Desk
Elected councilors in Barnet were exonerated by leading accountants Deloitte's in a 23 page report on the rationale behind the £27 million of council payer’s money ending up in failed Icelandic banks.
"If you have confidence in highly paid officers of the council, one is entitled to feel if you have the right people in the right positions they will make the right decisions. My point clearly here is that they didn't". Councilor Brian Gordon
"The apparent absence of detailed monitoring or supervision by Senior Officers contributed to the breach of the TMS 2006/7 and 2007/8 going undetected. This lack of monitoring represents a significant deficiency in internal control" - Deloitte's
Deloitte also looked into the Treasury Management Strategy, the reasons why the £27 million ended in Icelandic banks, and concluded that:
"4.8.2 The decision to make deposits is initiated by a member of the Treasury Management Team. The team is then authorised by the Treasury Manager and payment was subsequently authorised by a bank signatory."
"4.8.3 The process for dealing has been walked through with the treasury team and it was noted that there was no prompt process to check that counterparty Credit Ratings matched the TMS. This contrasts with prompts that are in place to check that Credit Limits with a single institution are not exceeded".
There was surprising consensus amongst the governing Conservative party and the opposition Labour councilors that there were some important lessons to be learned and that scrutiny of the workings of the councils Treasury department and policies of investing surplus cash with the report stating:
"The role of treasury advisers does not extend to assuring compliance with good practice in treasury management. Hence such arrangements need appropriate management, oversight and scrutiny". - 4.5.4
Councillor Monroe Palmer OBE raised the question as to why the Audit Commission did not ask where the £27 million is located by saying:
"I am a little disappointed about why the Audit Commission did not look at the balance sheet rather than the procedure".
Moreover none of the £27 million has been recovered by Barnet council, with Reuters reporting that the Icelandic government has drawn up new plans to recapitalise its failed banks:
"A deal would not necessarily guarantee the full recovery of the money owed to the creditors of Glitnir, Landsbanki and Kaupthing, but it would lay the groundwork for getting the new banks off the ground and returning the hard-hit Nordic country to international capital markets."
"Creditor talks are taking place in London, and a number of approaches and combinations are being discussed.”
“The new banks could even go ahead with a bond issue as early as next week to compensate the old banks for assets -- mostly savings deposits -- they took over last year to ensure a functioning financial system on the island. Creditors are also considering taking a stake in the banks, in which case their loans would be transferred into stock." - Indridi Thorlaksson, Permanent Secretary at the Ministry of Finance in Iceland speaking to Reuters.
Deloitte's concluded that the situation also created an opportunity for Barnet to learn from the mistakes that had taken place and said:
"4.2.4 The Icelandic banking crisis has given the Treasury Team the opportunity to review their treasury management strategy more critically and has resulted in some significant improvements." photo creidt: London Daily News
|
