DOCUMENTS obtained under Freedom of Information laws have shed startling new light on the practices of Scottish Borders Council and their huge financial losses in collapsed Icelandic banks, revealing the Tory-Libdem controlled local authority made a staggering 94 deposits, some totalling as much as £4 million pounds at a time over three years from 2006–2009 with now-bankrupt Icelandic banks totalling a whopping £172 MILLION POUNDS.
The new revelations in the continuing investigation by former Scotsman journalist Bill Chisholm of the multi million pound losses suffered by Scottish Borders Council in the now bust Icelandic banks Landsbanki & Heritable have prompted further calls for an independent investigation of Scottish Borders Council’s poor investment calls using taxpayers money, where it seems officials were allowed to invest massive amounts of taxpayer’s money without any elected councillors being in on the decisions.
Documents showing Scottish Borders Council’s deposit strategy in Icelandic banks make for alarming reading. The staggering amount of deposits made by Scottish Borders Council in the now-defunct Icelandic banks reveal at least 94 regular deposits ranging from £1 million to £4 million pounds at a time, with apparently little in the way of regulatory oversight in play while unelected officials at the Council transferred millions of pounds of taxpayers money into foreign banks for two to three months at a time. It appears from further enquiries that despite the huge amounts SBC threw at the Icelandic banks, not one single Council official or elected Councillor apparently bothered to travel to Iceland to check out the banks for themselves, instead they appeared to rely solely on the advice given to them by their Treasury Advisers Butlers, who were very close to the Conservatives who run Scottish Borders Council along with the LibDems.
The documents, which can be downloaded here : Icelandic Banking Deposits 2006-2009 : Scottish Borders Council (pdf) also reveal Scottish Borders Council were still making deposits in Icelandic banks in 2008 on the recommendation of their Treasury Advisers, Butlers, yet many other depositors had already pulled their money out of the very same Icelandic banks which SBC were still investing millions of pounds of taxpayers money :
Loan Ref. Lender Ref. Start. Mature. Principal.
2293 LANDESBA 15-May-08 17-Nov-08 £3,000,000
2294 HERITABL 21-May-08 22-Aug-08 £4,000,000
2306 LANDESBA 20-Jun-08 25-Jul-08 £2,000,000
2307 HERITABL 20-Jun-08 25-Jul-08 £1,000,000
2322 LANDESBA 25-Jul-08 23-Jan-09 £2,000,000
2323 HERITABL 25-Jul-08 23-Jan-09 £1,000,000
2335 HERITABL 22-Aug-08 19-Dec-08 £4,000,000
Further enquiries last year 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.
Further documents obtained by Mr Chisholm earlier this week which were not provided to him during his initial investigation of the Council’s Icelandic losses now reveal the details of Scottish Borders Council’s Treasury Management Policy, which amazingly OMIT any references to the Icelandic investments even though officials at the Council had moved nearly two hundred million pounds to the island’s now collapsed banks.
The Treasury Management Policy documents can be downloaded here : SBC Treasury Management Policy 18 April 2006 (pdf) & SBC Treasury Management Policy 31 March 2009 (pdf)
Speaking to Scottish Law Reporter about the revelations in the documents, Bill Chisholm said : “Copies of correspondence I received from Michael Moore MP in March revealed that the council had made 94 separate short-term deposits in four Icelandic banks between 2006 and 2008. I found that figure to be quite incredible so submitted a second FOI request to SBC asking for details of the amount of money involved.”
Mr Chisholm continued : “I had been told previously that the treasury management policy which approved Icelandic deposits had been sanctioned by the Executive in March 2008. So I also asked who had authorised the deposits made between 2006 and March 2008. You will see the answer to that in the council response.”
“I wonder if I am the only council taxpayer in the Borders who is amazed that our council had £172 million of spare cash sloshing around during a two year period. It seems they were constantly gambling with our money during this time. Is that a suitable activity for an organisation which is supposed to be providing public services?".
“My previous request for a full investigation into SBC’s Icelandic gambles and losses fell on deaf ears. In the light of these new disclosures is there still no case to answer?”
In November of last year, Scottish Law Reporter reported on the calls for a full investigation of Scottish Borders Council during November 2010 where it was revealed by the former Scotsman journalist Mr 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.
In the light of the latest revelations, Audit Scotland have now been contacted by Mr Chisholm to look at the case of Scottish Borders Council and the scale of their investments in Icelandic Banks. Mr Chisholm told Audit Scotland :
“Following my original representation to Audit Scotland and various politicians last October/November for an inquiry into Scottish Borders Council’s (SBC) reckless speculation on the Icelandic money markets there was a distinct lack of enthusiasm for an investigation. But for some reason SBC “forgot” to respond to Mr Michael Moore MP’s representations on my behalf until last month after he sent them a second letter.”
“When they did finally get round to it Mr Moore forwarded the correspondence to me. It revealed that between 2006 and 2008 SBC made 94 (yes ninety-four) separate short-term deposits in Icelandic banks. I found that statistic to be incredible and akin to money laundering. I therefore submitted a further FOI request to the council, asking them who authorised the investments between 2006 and March 2008 as I’d been told previously their Treasury Management Policy had been approved by the Executive in March 2008. I also asked for the total amount involved in the 94 investments, and the average sum deposited each time.”
“The response I received this week (attached) is equally incredible...£172 million of council taxpayers’ money involved with the details set out in the accompanying spread sheet. You will see that up to £7 million of PUBLIC MONEY was being deposited offshore IN A SINGLE DAY by one of the smallest local authorities in Scotland. Yet I can find no mention of these transactions in the council’s accounts and I was told previously there had been no involvement by elected members. Was the scale of this activity picked up in your organisation’s audits and was this level of speculation deemed to be acceptable? Does Audit Scotland still consider that SBC councillors were maintaining proper control over my local authority’s finances?”
Earlier this week, financial experts who studied the spread of deposits by Scottish Borders Council in Iceland said it appeared the Council had little awareness of the doomed state of the Icelandic banking system during 2008. The experts also questioned why officials were seemingly allowed to move huge amounts of public money in & out of the UK without any of the Council’s elected officials being consulted.
One Forensic Accountant warned there appeared to be a massive lack of accountability on the part of officials at Scottish Borders Council “who appeared to be playing Russian roulette in Iceland with taxpayers money”.
Commenting on the structure of the deposits, he said : “If this had been tried in British banks, money laundering laws would have queried the amount & frequency of the deposits yet it seems the Council was eager to invest its millions without too many questions in foreign banks.”
An investment analyst further indicated it was well known at the time in 2008 the Icelandic banks were in trouble and may go under. He queried why the Council seemed to totally rely on its treasury advice without checking up for itself.
No one at Scottish Borders Council was available for comment.
1 comment:
If Butlers are owned by a Tory and the council is Tory controlled with the aid of Libdem stooges maybe we should imply there is a political dimension to this scandal?
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