Icelandic banks - statement by the Leader of the Council

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Permalink Reply by John McMullan on October 18, 2008 at 9:03

Why did Kensington and Chelsea not get sucked in by the Icelandic banks? In the current climate, look around at who is offering the best interest rates and stay away from them, they're the most desperate for deposits and therefore most likely to be the next to go. Honestly, how come our council got it SO wrong? I feel sorry for them sure but it sounds like they should get a professional in to run their finances.

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Permalink Reply by Clive Carter on October 18, 2008 at 12:38

THIS suggests that the portfolio of the Head of Finance is too big.

Having glanced at a list of the activities for which Councillor Adje is currently responsible, perhaps too many functions have been placed under the umbrella of one man. The following list from the council's website, comprises just councillor Adje's cabinet responsibilities (he has other responsibiliites besides these):

Human Resources
Asset Management
IT Services and E-Government
Organisational Development and Learning
Benefits and Local Taxation
Corporate Finance
Procurement
Property Services

Could anyone be expected properly to manage such a collection? This list - which controls the purse strings - touches every aspect of the council. How did such a conglomeration of financial control come to be placed in the hands of a single person? Councillor Adje even clung on to a position on the council's Alexandra Palace Trading Company (a clear conflict with his role as Head of Finance) until the council voted to stop this. Where is councillor Adje's sense of propriety?

As you've rightly said, the tradition is that people who hold senior political office [should] take responsibility for failures of their subordinates. If politicians are prepared to take responsibility for things that their permanent officials get right, should they not also take responsibility when their officials get things wrong?

Icebank
The Icebank situation is not (yet) the subject of any independent investigation of internal procedures as with the shocking Walklate Report on the Licence to Firoka. But it doesn't seem too far fetched to imagine that the Cabinet Member for Resources had meetings with senior finance officers to discuss policy. And if not, why not?

Nobody wanted to see the Icebank situation, but Haringey unfortunately has amongst the highest exposures of any local authority. Rule number one of investment is spread your risk. And the official guidance for local authorities had security as the first priority. The senior council financial officers are well paid but for all the wisdom they brought to bear, we might as well have had clerks investing the our money if all that had to be done was follow a rule book.

I hope, for all of our sakes, that the Leader of the Council is right when he says that the Icebank money may be recovered at some point.

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Permalink Reply by Clive Carter on August 2, 2010 at 17:02

I've just received an email from LBH head of finance (Cllr. Joe Goldberg) in response to a question I asked at an Area Assembly meeting. It has an attachment being an update on the LBH deposits frozen in the Icebanks.

The projected loss of £3.8m assumes that priority status will be awarded to local authorities (which means other creditors will be further down the order of pay out).

This is presumably the latest position on the Icelandic banks, where Haringey had a total of £37,000,000 on deposit.

Attachments:

• LBH 80203 Cllr Goldberg.pdf, 139 KB

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