Thursday, 21 January 2010
£9 million down the drain and still no apology
The Barnet Press reports as its lead story that Barnet taxpayers’ stand to lose £9 million of the £27.4 million the council deposited in failed Icelandic banks.
When we first reported on this scandal in October 2008, former leader and cabinet member for resources Mike Freer tried to deny that the council had done anything wrong. When that tale was exposed for the complete untruth that it was, Freer changed tack and insisted that all the money would be recovered.
That was never a realistic prospect and the latest news proves that Mike Freer was either hopelessly naïve or he was hoping to spin the tale out until after the General Election when it wouldn’t be his problem.
What made matters worse was that instead of apologising to taxpayers, Teflon Freer was more concerned at passing the buck than accepting the responsibility that comes with being leader. This evasiveness continues under new leader Lynne Hillan who told the Press: “What Glitnir has done came out of the blue.”
What nonsense! Perhaps Hillan, like Freer, buried her head in the sand because the Icelandic finance minister Gylfi Magnusson stated publicly last February that creditors would not get all of their money back.
Hillan added: “The money was a very small part of what we had invested. You can’t have millions sitting in your current account, and who could have predicted what happened?”
Actually, Lynne, many councils predicted what was going to happen and withdrew their deposits in good time. The fact that the Icelandic bank ratings were dropping was a major clue if only the Cabinet Resources Committee, of which you were a member, had bothered to read the reports.
Perhaps Hillan thinks we have forgotten that the council actually borrowed £40 million from the Public Works Loan Board (intended for the schools investment programme) and then put the money on deposit in Iceland at a higher rate of interest in a process known as arbitrage. Which just happens to be unlawful for councils.
Although the council readily admits that the interest on its investment income forms part of the budget, Hillan went on to claim to the Press: “This has no affect on council tax because it’s nothing to do with the revenue budget.” Presumably Hillan also believes in Father Christmas and thinks that the moon is made out of cheese.