Send a letter to the Chief Executive of your local Council :
allan.reid@braintree.gov.uk
Dear Mr Reid,
I noticed that public money, harvested from the good citizens of Braintree by way of Council Tax has gone missing under your watch. £5 Million is the sum being reported by the press.
Can you explain to me why this investment was allowed to remain in Iceland when alarm bells have been ringing since August 2007, about the instability of the Icelandic Banks, and again as recently as May 2008 when these banks were being down graded?
There is little point all the local authorities appealing to central Government for a bailout from us the taxpayer, to replace our money as Ratepayers that your Authority has lost in a reckless investment.
I would like a full and dated explanation from yourself and the Chief Financial Officer within the next seven days as to the following- –
When was this investment made?
Why was it made, on whose recommedation and what independent advice was sought?
What checks were made on the credit worthiness of Landsbanki at the time?
What monitoring was made on this investment considering the warnings that were being put out in August 2007, and the later downgrading to BBB+?
When was the Authority first aware that Landsbanki were in financial trouble and what steps did you take to protect the ratepayers funds?
I do not wish to hear that you are making appeals to Whitehall, the officers and Councillors are legally responsible for this money, not Whitehall. This is an appalling state of affairs considering that the Local Authority has the right to extract this money from our pockets with the sanction of penal action if we do not pay and to find this level of incompetence within your Finance department.
If I do not receive a detailed explanation with seven days, who is responsible and what disciplinary steps are going to be taken, as there most certainly would be in a private enterprise, I will apply for this information with an application under the Freedom of Information Act and ensure that this goes to press.
For far too long have we had to put up with this lack of accountability at all tiers of Government. I look forward to receiving your acknowledgement and your detailed reply.
I will also be registering an official complaint with the Standards Board
Love and kisses
A tax payer
Go on, you know you want to. Remember, it’s YOUR money they’ve pised up the wall and they’ll want YOU to replace it.
h/t Guthrum
UPDATE: Some bright spark has put Iceland up for sale on Ebay, 99p start, no reserve
UPDATE:
A response
Dear Bastard Old Holborn,
Further to your email of 10th October 2008, I write on behalf of Allan Reid the Council’s Chief Executive to advise that your email will be treated as a Freedom of Information request and has been referred to me as the responsible officer .
The 20 working day period for the Council to respond to your request commences from Monday 13th October 2008 and expires on 7th November 2008. Should you have any queries regarding your request, please do not hesitate to contact me. However I would be grateful if you would note that I am out of the office from Monday 13th October and return on Thursday 16th October.
For your information the following text is a press release issued by the Government and The Local Government Association (LGA) and is followed by the Council’s responses to questions which have been asked following enquires of the media and others. These may provide a response to your request.
JOINT STATEMENT from GOVERNMENT and Local Government Association (LGA) – issued today. We had a very productive meeting and we agreed to stay in close touch, meeting again next week. Government and the LGA agreed that there is no evidence of recklessness by local authorities. They also agreed the financial framework for local authorities, which requires them to strike an appropriate balance between security of investments and returns, appears to have been adhered to.
Many authorities have already publicly stated that any risk is not a threat to frontline services but a small number of authorities may have specific problems. We agreed once the LGA completed its analysis of the effects of the situation on individual local authorities, we will look at issues arising on a case by case basis. For those local authorities who are facing severe short term difficulties Government and the LGA will agree an appropriate set of ways to assist. We will judge what’s appropriate on a case by case basis but in previous situations support has included helping local authorities restructure their financial priorities, providing additional expertise and capitalisation of expenditure.
The Government and international partners have already acted to support stability of the banking system. Action has also been taken in relation to the position of Icelandic banks – including freezing assets of Landsbanki. Local authorities, along with all other investors, will benefit. The LGA will be seeking to open discussions with administrators of the UK subsidiaries. The LGA and Government encourages all councils to continue operating investments in accordance with the guidance. LGA and Government will continue to monitor the situation closely. As of 6pm yesterday evening (9/10/08) , we had reports of 108 councils in England and Wales with £798.95m deposited in Icelandic banks.
Frequently asked questions – adapted for Braintree District Council
Q. What is the value of your investments with Icelandic banks? A. £5 million.
Q. What percentage of your overall investment is with Icelandic banks? A. 9%
Q. Which Icelandic banks are the investments with? A. Landsbanki £3million (consisting of 2 investments); Glitnir £1million; and Kaupthing Singer & Friedlander £1million.
Q. Why was the money not pulled out sooner? A. We stopped investing in Icelandic banks several months ago. At that time there was no indication that these banks were in difficulty. Additionally, these are long-term contractual deposits which cannot be withdrawn.
Q. Was it irresponsible to make the investments? A. No. Prudential financial management means that we put money into a diverse range of banks to make sure that any risk is spread to minimise the impact of problems in the financial markets. All our investments are carefully considered and planned, and are placed using an approved lending list agreed with our external treasury advisors.
Q. Was it irresponsible to leave the money in so long? A. Based on the advice we were given it was safe to do so. Two of the investments were for 2 years (placed in March 2007) and the other two were for 6 months (placed in April 2008).
Q. How confident are you that the money can be retrieved? A. We are confident that the LGA will put up a very strong case to the Government to protect these deposits. This is taxpayers’ money, not council money, so it should be given the same protection that has been afforded to individuals.
Q. If the absolute worst comes to the worst, and the money is lost (of course we all hope not) what will the effect be on the taxpayer?A. The Government really must ensure that these deposits are protected, but if it does come to the worst there will be no immediate impact on the taxpayer. In the longer term, the council will need to manage its spending plans and use of reserves in order to ensure that tax payers are not adversely affected.
1. Local Government is a huge sector, spending £106bn a year and employing 2.2m people. Councils have big bills to pay, as employers and purchasers of services
2. Most councils receive government grant quarterly to spend over the coming months. Councils invest this money in banks with solid credit ratings to accrue interest over a relatively short period of time and withdraw it when it is needed.
3. Local Government holds significant contingency funds. For example, last summer councils spent millions of pounds helping flood victims by putting them up in temporary accommodation.
The LGA will meet the Government again on Thursday. By then, we hope to have the definitive picture on how many councils are involved and how much money was deposited in Iceland.Councils have large amounts of money invested with banks because during the good times we saved for stormy weather. Because councils have these reserves, we don’t believe frontline services will be affected nor that council taxes will have to rise. We invested money following government guidance about spreading risks and seeking a high return; we sought independent financial advice; and we relied on the vetting of international credit agencies.
Kind regards, Emma Wisbey
Governance Lawyer
I have launched a FOI request to see that guidance, know who the indepedant advisors were and the see the credit ratings