TORY TREASURER ADVISED IN DORSET COUNTY COUNCIL'S ICELANDIC INVESTMENTS FIASCO
The local authorities facing the largest losses from the collapse of the Icelandic banks were all advised by the same company. Kent, Norfolk, Dorset and Hertfordshire county councils and Nottingham City Council and the borough of Barnet all paid for the services of Butlers, which is owned by the treasurer of the Tory party, Michael Spencer, who has a fortune of £1bn.
Three of the six also paid Butlers' parent company ICAP to broker some of their investment deals. One of the others failed to say who brokered its investments.
Between them, the six councils have £207m in Kaupthing, Glitnir and Landsbanki banks or their UK subsidiaries. The money is about 20 per cent of the estimated £1bn potentially lost by local authorities.
Lib Dem District Councillor &Prospective Parliamentary candidate for south Dorset, Ros Kayes, learned on Saturday of the Butlers/IACP link today said:
”What concerns me is not so much that Dorset County Council invested money in an Icelandic bank ( although any public body does have a responsibility to invest public money with some caution rather than just trying to make a quick profit), but that a Tory council was using a company owned by theConservative Party Treasurer to advise them on that investment. I can’t believe they could be so naïve – it was bound to raise questions however it came out.
I'd like to know who else put in a tender for the advisory role; and how Butlers/IACP were chosen, as well as how much they were paid for this advice. We'll need to follow the audit trail on this quite carefully. Just on a matter of ethics, I would have thought it was highly foolish, in dealing with public finance, to be receiving ostensibly impartial advice from a body run by a member of the same political party. It's just poor practice.
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3 comments:
Well, if there's money in the trough what do you expect?
Following your blog about Butler's
being as you call it at fault with wrong financial decisions made by DCC. Capita, which has it's hand in all matters concerning councils around the country including buildings such as new schools, hospitals etc., have also a financial strategy division.
(promoted by the Labour Gov.) This division is called Sector. In the national press this has been cited as one of the reasons Councils invested in the various Iceland Banks. Read the following.
Sector Treasury Services has been providing strategic financial advice to local authorities for over 25 years. However, it does not provide recommendations in relation to the credit quality of financial institutions, instead it supplies its clients with credit ratings from rating agencies such as Fitch and others who do make this financial assessment in order that clients can take an informed view. These credit ratings are used extensively by clients to determine which organisations should be on their lending list.
Sector's main income is derived from providing strategic advice public sector organisations. Sector does not receive transaction commission from clients placing through retainer contracts with fixed term deposits with financial institutions.
This is something you could look into!
Thanks Julia,
That's very interesting - though possibly not quite so blameworthy. However, you do have to wonder why Sector feel it's okay to offer advice about investing publlc money without accompanying credit recommendations.
I think the moral of the story is that they could also have been providing credit updates as part of their service.
Do please keep me updated of anything more you discover !
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