Harringay, Haringey - So Good they Spelt it Twice!
Icelandic banks - statement by the Leader of the Council
Tags for Forum Posts: Icelandic banks crisis, taxpayers' money
Replies to This Discussion
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Permalink Reply by Hugh on
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A couple of notes on this ongoing situuation:
New rapid response unit ready to deploy team of finance experts to ...
and
Joint Statement by Government and the Local Government Association
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............and a further update heer from the local press:
Council Tax rise fear to pay for Iceland banks fiasco
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Permalink Reply by Clive Carter on
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REGARDING the Haringey Icelandic Bank Fiasco, the Council Leader is reported to have said,
"Policies, guidance and advice were followed to the letter. Comment to the contrary is inaccurate."
This is exactly the problem: the rules were followed blindly and taken literally. The letter was observed but not the spirit. Heritable Bank is a subsidiary of Landsbanki, so for practical purposes, they were the same bank with the same risk. And thus our exposure was £35.2 million to a single Icelandic bank, rather than £20 million. There is no evidence of understanding of the reasons behind the rules and this lead to a greater exposure to a single bank-risk than would have been otherwise.
It is said that rules in general are there for the blind obedience of the dim-witted and for the guidance of the intelligent. Normally this is interpreted to mean that if the sense behind rules is understood, they can be safely broken in certain circumstances.
I see an analogy with the speed limit. Sometimes, at one's own risk, a sober driver might safely exceed the speed limit in a roadworthy car on a good road in fine weather with light traffic. An extra burst of speed of £4.1mph (on 29 September) might be safe in such conditions.
But in different conditions, travelling at just under the speed limit (£19.8mph in a £20mph zone) might be unwise when the road is pot-holed, the weather is atrocious and the driver is the Head of Finance at Haringey Council Councillor Charles Adje. By dangerous driving he has injured every recipient of services and council tax payer in this Borough. He should lose his Licence.
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Permalink Reply by David T on
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I don't think that we should single out LBH - all sorts - individuals, businesses, councils, charities, other public bodies, were taken in by the promise of high interest rates offered by the Icelandic banks. Some may remember the BCCI incident - which also took in similar people - the difference was that BCCI (known before its collapse in my trade as Bank of Crooks & Conmen International) was thoroughly bent and the depositors should have known better. In this case I have not heard any imputations of dishonesty - it is simply that the global economic system has more or less collapsed and Iceland was the most exposed to such an event. It occurs to me that there could be a similar situation with the Irish banks, who are also offering high interest rates, based on an economy which may be known as the "Celtic Tiger", but may not have much more of a sound basis than the Icelandic. How much money does LBH (and individuals, charities etc. etc.) have invested there?
On the other hand LBH's (our) money could have been invested in the Stock Market (collapsed), or safely in Government bonds etc. - but at half the interest rate. I'm sure we would not have thanked them for that!
A western developed nation's economic system has gone down the tubes. Only the most cynical anti-capitalist might have predicted that. LBH, and all the other bodies with a duty to optimise their finances, did not.
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I agree that LBH weren't the only ones caught short. It's important to acknowledge that. But we should also acknowldege that some councils, like Brighton, smelt something rotten and kept their money out of Iceland. So there were choices to be made.
As for singling them out, I'm all for it. They're the only borough I live in and pay council tax to.
However, in terms of putting the discussion in context, agreed.
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Hugh - point taken. But it is interesting that you exhibit Brighton (presumably "and Hove") as exemplars - in Private Eye (not perhaps the most reliable of journals) they are known as "Skidrow-on-Sea" and not renowned for their financial and other probity... But on a random basis I suppose that any one can get something right from time to time.
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Fair enough. Thanks for that balancing.
I guess what I'm hoping for now is that somewhere in our lot is enough smarts to get us out of this mess.
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IT HAS transpired that even the Audit Commission had money on deposit in the Icebanks. That is not to their credit and they will have to account to their masters, perhaps the public accounts committee, in turn. We should not concern ourselves with the behaviour of others who will have to make their own excuses, but worry about our own patch.
In addition to Hugh's point – that LBH is the Borough that takes our money – they need "singling out" for these reasons: (a) highest exposure to the Icebanks out of all boroughs in London (b) highest per capita exposure nationally (c) evidence of evading the intention of the guidelines intended to limit exposure to £20m to any one bank (by depositing an extra £15m in a subsidiary) and (d) is the responsibility of none other than the Head of Finance Counclllor Charles Adge.
This member of the "executive" has form in financial irresponsibility: behind him, he leaves a trail of financial destruction wherever he goes. Between Alexandra Palace and the Icebanks, he has cost us all tens of millions of pounds (I do not include the wasted £300,000 of expenditure on botched plans to move the council to Woodside house, because that is a bagatelle by comparison).
Councillor Adge is is happy to take credit when things go right but shoulders no responsibility otherwise. His performance in the council on Monday was regretable. He can see no reason why he should have to resign, but growing numbers of people can see the reasons all too clearly.
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Permalink Reply by Alan Stanton on
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I'm in an odd position. Defending Cllr Charles Adje.
But does anyone really expect any elected councillor to start directing a local authority's finance officers who are responsible for day-to-day investment of the Council's cash balances? Asking tough questions? Sure. And insisting on answers? Absolutely. Checking that full professional advice for key decisions is always sought and obtained from qualified and experienced professionals? Of course!
Each of these were matters which the Walklate Report found that Cllr Adje did not do when it came to the Alexandra Palace licence to Firoka. But there is no indication that he fell short in these matters when it came to the Icelandic banks deposits.
In my view, after the Firoka licence, Cllr Adje's position is completely untenable. But I make that judgement based on the evidence of Martin Walklate's careful, factual, independent report - nothing in which has been contradicted.
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