Inept councillors from Scottish Borders Council who stashed a massive £10 million pounds of taxpayers money into Icelandic Banks which were already showing signs of going under when the Council transferred the funds, can, for the moment, breathe a sigh of relief that no immediate scrutiny of their calamitous investment decisions will take place, after it was revealed Audit Scotland have whimpered out of of any further investigation into the local authority's substantial Icelandic Banking losses.
Scottish Borders Council are known for having a less than dependable record of maintaining its books, notably on one occasion where some £4 million pounds disappeared from the council’s Education budget, forcing huge cuts on Borders public services several years ago.
Retired Scotsman reporter William Chisholm who has been investigating SBC's dodgy finance deals in the Icelandic Banks, spoke to Scottish Law Reporter earlier this week, revealing the Audit Scotland cop-out.
Mr Chisholm also commented on lack of accountability at the hapless Borders local authority, and noted the Council had refused to hand over copies of particular documents in response to his Freedom of Information request, documents which contained the actual financial advice which Butlers Treasury Advisers, (the Treasury Advisers used by Scottish Borders Council), had given to the local Council, advice which was then used as justification for the ill fated, reckless investments.
Mr Chisholm said : “I said right from the outset that I did not expect the Audit Commission to investigate the loss of over £2 million resulting from Scottish Borders Council’s reckless investment in two Iceland banks. But as a council taxpayer I felt I had every right to challenge and question the negligent actions of my local authority which have cost the Borders dearly. My aim was to have those responsible for the folly to be identified then held to account.
“However, in response to my Freedom of Information request the council declined to name the “treasury officials” who transferred £10 million of public money into the Icelandic banks in the summer of 2008 when virtually every other investor in that country was pulling their cash out before it was too late.”
“SBC also refused to give me a copy of the advice they received from their external treasury advisers before the catastrophic investments were made. The council provided me with a link to a website said to contain minutes of a relevant executive meeting in 2008. Unfortunately the link was non-existent, and when I pointed this out to them on 12 October 2010 I received an emailed apology with a promise to supply the correct link. I am still waiting.”
“After a great deal of detailed research I passed my findings to politicians of every political persuasion with a request that they either institute an inquiry or at the very least support my call for an investigation. Sadly not a single MSP or MP agreed to back that request, and in the case of John Swinney, the Scottish Government Finance Minister, he has not even acknowledged receipt of my report even though I have submitted it to him twice since 27 October 2010. I remain convinced an inquiry by the Scottish Parliament into the multi-million pound losses by Scottish local authorities in Icelandic banks should be held.”
Mr Chisholm ended by saying : “I must thank my own constituency MSP John Lamont who raised the issue with Mr John Baillie, the chairman of the Accounts Commission. He (Mr Baillie) has told Mr Lamont: “The Council (SBC) is best placed to provide any further information to Mr Chisholm to give a full picture of the actions they have taken on the Investments.”
“If only that were true. At least the subject has received a good airing; sadly I notice from the council’s audited accounts for 2009/10 that the Icelandic impairment has now increased to £3.088 million.”
Scottish Law Reporter reported on the calls for a full investigation of Scottish Borders Council during November 2010 where it was revealed by retired Scotsman journalist William Chisholm who carried out his own investigation of SBC’s Icelandic finance deals, that Audit Scotland had been asked to investigate claims Scottish Borders Council acted negligently & recklessly in investing a staggering £10 million pounds of taxpayers money in the now collapsed Icelandic banks. The Council, which is now cutting posts & public services across the Borders is expected to lose more than £3 million pounds on its investment and that the final payment (if indeed any payments are made) of its expected return is not due until October, 2018.
It also transpired that during Mr Chisholm’s investigation of how Scottish Borders Council invested in the Icelandic Banks, SBC’s Treasury Advisers, Butlers, had been involved in similar losses to local authorities all across the UK, totalling hundreds of millions of pounds.
Further enquiries revealed Butlers Treasury advisers were linked to the Conservative Party’s Treasurer, Michael Spencer, who was the subject of a report in the Independent newspaper, where, following a two month investigation, journalist Martin Hickman alleged that "councils who paid [a firm run by Mr Spencer] for strategic advice were almost twice as likely to have lost money in the three main Icelandic banks as those advised by other companies. The Conservative Party’s own website continues to list Mr Spencer as its current Treasurer.
The Independent’s investigation of Butlers and its connections to local authorities in the UK, continued : "Of the 116 local authorities who lost money, 51 received advice from Butlers. Their losses totalled £470m, more than half the total amount of council funds frozen in the banks."
An insider, speaking to Scottish Law Reporter earlier this week alleged the failure of Audit Scotland & MSPs to look into the dodgy investment policy of Scottish Borders Council may be down to “a political cover up” as Scottish Borders Council is run by the same coalition of Conservative & LibDems which currently run the UK Government.
The insider said : “In the circumstances of Scottish Borders Council being run by a coalition of Conservative and Lib Dem councillors, and with the Borders being represented in both Parliaments by either Conservatives or Liberal Democrats how can the public ever hope to get an investigation into complaints against the council ?”
It was also pointed out that the Treasury Advisory firm used by Scottish Borders Council is also linked to the Conservative party, and that questions needed to be asked over how the company was appointed and whether any political bias played a part in its placement as the Council’s Treasury advisers.
A local Borders openness campaigner speaking on the matter yesterday said : “Having looked into the matter, I feel there is a mist descending on the Icelandic investment matter to protect Conservatives & LibDem Scottish Borders Councillors from any potentially damaging investigations into their conduct, particularly with an upcoming Scottish Parliament election later this year in May 2011.”
He continued : “There must be an investigation as to how the Council arrived at decisions to invest millions of pounds in banks which were already widely regarded as risky at the time. If the money is lost, Councillors should be personally surcharged to recover the funds to taxpayers.”
No one from Audit Scotland or Scottish Borders Council could be reached for comment at time of publication.
An additional scandal has since hit Scottish Borders Council after it was revealed its Golden handshake policy is one of the most generous in the land, ranking even greater than big city councils such as Glasgow & Manchester, after figures revealed on the Bureau of Investigative Journalism website showed that, in the three years from April 2007 to April 2010, the council paid out £1.245million in contract termination payments to 47 staff.
The total amount disbursed to departing employees placed SBC seventh in the top 10 of 433 councils in Scotland, England and Wales. The highest spender was Manchester City Council which paid out more than £4.6million to 416 staff members: an average payment of £11,200. Glasgow City Council, which shelled out £1.721million to 611 staff (an average of just £2,815) came fifth in the league table.
Scottish Borders Council’s payments worked out at a whopping £26,492. Over the same period, the council made 37 redundancy payments totalling £349,000 and paid out 92 other end of contract lump sums totalling £702,370.