Friday 13 March 2009
£292 million of Barnet taxpayers’ money put at risk
As Barnet residents are now aware, the council’s potential loss of £27.4 million deposited in Icelandic banks was not due to unforeseen global events as previously claimed, but was actually caused by a reckless failure to follow its own investment policy.
When news of the missing millions first broke, Mike Freer tried to reassure residents that it was no big deal as the money deposited in Iceland represented “only” 8% of the council’s deposits.
But LibDem Councillor Duncan Macdonald, who sits on the scrutiny committee investigating the council’s investment policy, has revealed on his blog that 89% of Barnet’s deposits breached the council’s own investment guidelines.
According to Mike Freer’s blog, the council has £328.8 million on deposit which means that a staggering £292.6 million has been invested in unapproved schemes. This works out at £2,231 per household* in Barnet - twice the annual Band D Council Tax charge.
A treasury management officer has resigned, but the idea that just one middle ranking officer could be responsible for the council’s investment decisions is laughable. There has been a systemic failure of management and processes and Barnet Council Watch again calls for Chief Finance Officer Clive Medlam to be suspended forthwith.
We have been promised an external investigation into what went wrong. A more urgent review is required to ensure that our money is immediately withdrawn from any bank which fails to meet the minimum agreed investment criteria. Otherwise Iceland could prove to be just the tip of the iceberg.
* 131,143 households in Barnet according to 2001 Census.