Barnet lose out on £1.87m 'indicative interest' from failed Icelandic Banks deposits

Tory-run Barnet council has secured only £1.13m of the £3m 'indicative interest' recoverable on the £27.4m deposits they invested in collapsed Icelandic Banks Glitnir and Landsbanki in 2008.

In an email to all councillors dated 4 July the Director of Resources outlined that £28.53m had been recovered in total. The winding up board of the Icelandic Banks had advised that £3m in interest would be recoverable, although this was only "indicative and not fixed".

Barnet council had deposited the £27.4m in the two Icelandic Banks despite their credit rating being below the minimum required in the council's Treasury Management Strategy.

An independent report to an ad hoc scrutiny committee established at the time to investigate what had happened, exposed a catalogue of failures including an absence of detailed monitoring of Treasury Management by senior officers, no regular compliance checks outside the Treasury Management team, and a lack of regular treasury reporting to members.

Leader of the Labour Group, Cllr Barry Rawlings said: "I'm glad to see we have reached the end of this sorry saga which has reminded us yet again just how incompetent the bungling Barnet Tories are.

"This is a vast sum of council tax payers' money that was gambled and then frozen in Icelandic Banks for years and has not been available to help fund council services at a time when we have seen millions of pounds cut from the council's budget."

Labour's representative on the Ad Hoc Scrutiny Committee, Cllr Alan Schneiderman said: "The scrutiny committee and independent report commissioned by the Council identified a string of failures including an absence of monitoring, no regular compliance checks and the fact that almost 90% of the Council's investments were against Council policy. As a result Barnet has lost almost £2m that could have been used for libraries and many other vital services."

Ends.

Notes:

1. A copy of the email from the Director of Resources:

From: Darr, Anisa 

Sent: 04 July 2016 11:16

To: Conservative Cllrs; Labour Cllrs; Cohen, Cllr Jack
Cc: Hooton, John; Shaw, Cath; Evans, Stephen; Cocker, Sue
Subject: Update: Deposits in Icelandic Banks

Dear Members,

I wanted to update you on the conclusion of the process of recovering the council’s deposits from Icelandic banks. Policy and Resources Committee on 9 July 2015, delegated authority to the Chief Operating Officer in consultation with the chairman of Policy and Resources Committee to sell the council’s interest in the insolvent estate of the Icelandic bank Glitnir hf.

Barnet took part in an auction by the Central Bank of Iceland which took place on the 16 June 2016. Settlement took place on 29 June 2016 with funds being received on 30 June 2016. Total monies received for the balance held in escrow was £2.584m. 

In summary, the council had deposits of £27.4m in the Icelandic banks Landsbanki and Glitnir and the winding up board had advised that interest of £3m would be recoverable on this, however, this was indicative and not fixed. After taking part in this recent auction, the council has recovered £28.53m in total, this represents recovery of all of the principle and £1.13m in interest.

Feel free to get in touch if you have any further queries. 

Anisa Darr

Director of Resources

2. A copy of the independent report by Deloitte LLP: http://barnet.moderngov.co.uk/Data/Ad%20Hoc%20Overview%20and%20Scrutiny%20Committee/200907081900/Agenda/Document%202.pdf 

For more information contact Cllr Barry Rawlings: cllr.b.rawlings@barnet.gov.uk

To contact the Barnet Labour Group: 020 8359 2568

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