Watchdogs blast council over £5m lost' in black hole
PUBLISHED: 17:45 01 April 2009 | UPDATED: 11:30 12 August 2010
A WATCHDOG has slammed council bosses for investing £5 million of taxpayers money into a black hole . The Audit Commission accused the financial directors at Bromley council along with 126 other local authorities of taking too many risks with public mo
A WATCHDOG has slammed council bosses for investing £5 million of taxpayers' money into a "black hole".
The Audit Commission accused the financial directors at Bromley council along with 126 other local authorities of taking too many risks with public money.
This comes after a total of £953.53 million of public money across the country was invested with the two Icelandic banks - Glitnir and Landsbanki - when they went into administration last year.
Campaign manager at TaxPayers' Alliance Susie Squire said: "The audit commission is absolutely right to slam the councils.
"There are a few councils that managed to get money out in time such as Norfolk and Brighton and Hove.
"We pay a lot of money for these council financial directors who we are told are worth it and many of them fell asleep on the job and weren't taking the due amount of care with taxpayers' money.
"We could see council tax go up because of this budget deficit. They shouldn't pass this money onto council taxpayers.
"The councils are putting a brave face on it but we don't know if we are going to get that money back. The fact is they put huge sums of money at risk. There is a deficit in funding services and wages.
"They are planning ahead as if they are not going to get that money back.
"It should be a safe pair of hands every time when it is tax payers' money.
"They have literally put the money down a black a hole."
Ironically the Audit Commission had £10 million invested with the failed banks but Ms Squire said this should not take away from the findings of the report as it was commissioned specifically to look at how councils managed their money.
The report read: "Had all authorities stopped depositing in Icelandic institutions after April 2008, then the amount of money at risk would have been over £500 million lower than is the case.
"The consequences of this lack of caution has been the potential loss of large sums of public money."
A spokesperson for Bromley council said: "The Audit Commission recently awarded the council a top rating of four stars for use of resources and stated in their annual audit and inspection letter that our Icelandic deposit 'was not an indication of weak treasury management arrangements as the deposit was made at a time when there was no sign of unusual risk in Icelandic-owned banks.
"We remain optimistic about a reasonable level of recovery of our investment."
The Metropolitan Police Authority (MPA) have also potentially lost £30 million in the sinking Icelandic banks and Transport for London (TfL) had £40 million invested with failed bank Kaupthing Singer and Friedlander.