Landsbanki make £1.5m payment to Stoke-on-Trent City Council

Stoke-on-Trent City Council announced today it was one of the 80 councils that has received its first repayment from money owed after the collapse of the Icelandic bank, Landsbanki.

The city council received £1.5m of its £5m owed and is expecting more installments in the future. Stoke-on-Trent City Council lost the money in the Icelandic banking crash after an email, sent by the council’s credit agency, which showed a downward review of Landsbanki’s credit rating, was not acted upon by one of the council’s officers.

Sarah Hill, cabinet member for finance, said this morning

This is excellent news for the city council and a well-deserved success for the Local Government Association (LGA) and its partners in the Supreme Court case. The way in which we have co-ordinated the legal action with the LGA, and other local authorities is an example of our effectiveness as a council, we have minimised legal costs and provided excellent value for money for the taxpayer.

This is very welcomed money for the council, £1.5m is a lot of money but it isn’t new money, it is money we were confident we would get back and is already committed for capital expenditure over the next few years.

So unfortunately it doesn’t change the budget proposals before the council later this week. However it is good that after four years we know for certain we will get most of our money back from Landsbanki.

The legal action was, coordinated by the Local Government Association, to secure priority creditor status for UK local authorities following the winding up of Landsbanki and another bank Glitnir. Local authority funds worth £413m were held by Landsbanki when it collapsed in 2008, and the LGA expects some 98% to be eventually recovered.

LGA chair Sir Merrick Cockell, said

This is the result of four years of hard work on behalf of the sector and we are absolutely delighted that we have been able to help more than 80 local authorities.

Stoke-on-Trent City Council are a step closer to recovering money lost in Icelandic banking crash

Stoke-on-Trent City Council have released a statement regarding the Icelandic Supreme Court ruling on Friday which ruled that the deposits of UK local authorities in Landsbanki HF would be given priority status over other creditors.

We are delighted the Icelandic Supreme Court has found in favour of UK local authorities and other UK wholesale depositors.

This judgment means that claims have been recognised as deposits with priority status over other creditors’ claims. This means they will be paid first when it comes to getting their money back and will recover almost all of the money they had on deposit with the failed Icelandic banks.

This decision which comes more than 3 years after the banks failed is a huge victory. The way in which the LGA and our legal advisors have co-ordinated the legal action with other local authorities / [other] universities and other UK wholesale depositors has minimised legal costs whilst enabling us to advance the strongest possible arguments to secure this result. The cost of the litigation to date amounts to less than 1 per cent of the amount we expect to recover.

While Stoke-on-Trent is not a test case this is a vital step forward to securing our claim.

The Supreme Court ruling Securing priority status for UK Wholesale Depositors in the administrations of [Landsbanki [and] Glitnir] and could save council taxpayers as much as £4701 million nationally.

Stoke-on-Trent City Council missed the opportunity to withdraw £3m of the £5m deposited with Landsbanki in 2009 because the warning E-mail sent to the City Council by its Credit Agency was not opened. The Audit Commission investigated at the time, agreeing that it was a ‘genuine mistake’

Tony Walley – On My Stoke-on-Trent Soapbox

I trust this article finds you fit, well and full of festive cheer.

This New Year needs to see a new start in Stoke-on-Trent.

I was out of action for a while pre Christmas, due to a back injury which prevented me from spending my usual amount of time at my PC. During that down time, I found myself ponderings the goings on at Stoke-on-Trent City Council.

I think that it is fair to say that the end of year report on our public servants down at the civic is the classic “Ëœmust do better’.

The two stories that rocked the 6 towns just before the festive break [was it a case of the best time to air our dirty laundry?] were the audit finding on the Icelandic bank fiasco and the release of the report, forced by a Pits n Pots investigation into waste management and recycling.

Both issues raised serious concerns about the way our City is being administered and has called the integrity of a number of officers into question.

It was nice to see other media outlets pick the recycling issue up and run with it when they showed little or no interest in it previously. Mind you we did hand it to them on a plate following the extensive hours burning the midnight oil researching an issue that literally cost our city millions of pounds.

Let’s focus on the Icelandic issue first shall we. This was all about an unopened email warning the City Council that the creditworthiness of the Icelandic Bank Landsbanki had been downgraded. Note, it did not say the bank was going to collapse so get your money out now.

That email was left unopened which prevented the senior officers from assessing the risk to the city’s investment in light of the new information. I have information that the officer concerned who did not open that email offered to resign. The offer was declined.

The issue was reported to the appropriate Director, the Council Manager was informed, the then Elected Mayor was “Ëœbriefed’.

Why the Elected Mayor chose not to inform other elected representatives only he can say.

The shameful fact is that no other EMB councillor or any other councillor in the chamber was informed. Effectively the issue was covered up and hidden from our elected representatives and therefore out of the public domain.

Let’s not kid ourselves here, it was only down to the fact that the information was to be included in the Audit Letter that we got to heart of it at all.
Now let’s turn to the Recycling issue.

Pits n Pots had been aware of some of the issues relating to the Waste Management and Recycling for a good few months before we had the time to investigate the matter as thoroughly as we would like.

Our suspicions proved to be right. Officers withheld vital information from our elected representatives. The recycling trial was a sham as £1.6million of blue bins had already been ordered.

A report conducted by WRAP was effectively buried and kept out of sight of the prying eyes of those councillors who see it as their duty to scrutinise the decisions made by the executive and highly paid officers.

Our whole point in investigating this issue was to prove that a massive amount of our money has been spent without the involvement and knowledge of those who we elect to serve us.

The Audit report claims that WRAP gave a series of recommendations on how best to collect our waste and maximise our recycling. It did not, it gave a series of options which the council needed to debate.

That debate would have had input from all sides of the chamber and would not just focus on the least cost option which officers opted for.

There were a number of councillors that were unhappy at the quality and lack of substance in the reports put before councillors both on the EMB and within the chamber.

We reminded the Leader of the City Independents that he had called in the decision to go to a trial of the new recycling scheme.

The reports that were submitted to any committee were poor at best and deliberately lightweight at worse.

Those officers made a square peg fit into a round hole and spent a huge sum of our money in the process.

One of those options put forward from WRAP was the exact same model that Newcastle opted for [they had a WRAP report at around the same time]. Newcastle had full member involvement; they showed how mature they are as an authority and selected the best option for their residents. NULBC now realise 52% recycling as opposed to SOTCC’s 42% at best.

Furthermore NULBC did not go out and spend a stupid amount of money on blue bins that if our city council had have been more open about the options, we would not have needed to purchase them [originally they were to be leased, who changed their mind?]

Cllr Joy Garner did not come out of the Audit very well at all.

She was the EMB member at the time and people have said to me that she must have been in on the cover up.

People are thinking that she was working in tandem with officers and deliberately keeping councillors out of the loop.

Well let me tell you what I believe, Cllr Joy Garner, in my humble opinion, was as much as a victim as the rest of the councillors in the chamber.

I spoke to Joy on several occasions when gathering information for our investigation. It was Pits n Pots that informed Joy about the WRAP report that was buried and kept away from elected representatives. She was not aware of this report and as someone who is passionate about green issues and knowledgeable about waste management services she would have been as upset as anyone that she the as the portfolio holder was not given all the facts on which to base her support on.

I am aware that Cllr John Daniels has called on the District Auditor to look into the matter. I also think that he is the Councillor that contacted the Chair of Audit Committee, Cllr Michael Coleman offering more information.

Cllr Coleman was prevented from allowing the councillor to come before his committee on the advice of the council’s legal officer.

In the words of my dear old dad “Ëœit’s time for him to poo or get off the pot’- well it looks as if Cllr Daniels is at last willing to force this issue out into the public domain and in doing so exposing the many issues that were caused by the deliberate withholding of the vital information needed to make the best decision for our city.

I don’t think this issue will go away, in fact I expect more revelations in the near future.

Finally let me say this; It is true that all of this happened on someone elses watch and under a very different system of governance.

I think that Stoke-on-Trent was used as some sort of crazy experiment.

Someone somewhere decided to see what how an authority would operate with an unelected officer at the helm and with the final say over every strategic decision.

This system of governance rode roughshod over our city’s democracy. It made our politics worthless and was massively disrespectful to our city’s residents.

The two issues that this article concentrates on proves that an officer led authority, where the involvement of those who are elected by the public to serve the public role is diminished to a point that they are basically useless, was an epic failure.

Our new Chief Executive Officer John van de Laarschot [yes I am a bit of a fan] says that he is committed to openness and transparency. Our Council Leader Mohammed Pervez says the same.

Well guys time to prove it once and for all.

Let the full facts on the waste management and recycling come out into the public domain. Let Councillor John Daniels have his say in a very public arena [extraordinary council meeting to discuss the audit report?] and lets put this sorry and very expensive saga to bed for once and for all.

I trust the integrity of our CEO and Council Leader. but with all that has gone on under the direction of those who have moved on to wreak havoc in other authorities, a contract agreeing the process and involvement between the officer core and elected members should formulated and signed by both parties.

The relationship between our city’s officers and councillors is at an all time low. Many councillors have told me privately that the no longer trust officers of the council. This is not conducive to a productive and progressive environment which is essential to the improvement of our council over the next few years which will be fraught with financial hardship and difficulties in providing effective services.

It is true that what has gone has gone. But we must implement measures to ensure that there is no return to the “Ëœwe will deal with the politicians IF we have to’ days.

With recent revelations it proves we are nowhere near yet and until we are there will be the leaks, the whispers and the accusations.

You can bet that Pits n Pots will be as active, no even more active in bringing issues out into the public domain.

Someone once said “print and be damned!” and you can bet we will”¦.

Happy New Year!

Stoke-on-Trent City Council Mistake Prevents Possible £3million Icelandic Loss

Human error at Stoke-on-Trent City council prevented the possible withdrawal of £3million that had been invested in the failed Icelandic bank Landsbanki.

An email, sent by the council’s credit agency, which showed a downward review of Landsbanki’s credit rating, was not acted upon by one of the council’s officers.

The officer left the email unopened and the Icelandic banks including Landsbanki collapsed soon after.

Stoke-on-Trent City Council had a total of £5million invested in Landsbanki but only £3million could have been withdrawn due to the interest deal in place at the time.

The unopened email warned of that Landsbanki’s creditworthiness had been reduced and did not suggest the imminent collapse of the bank or the immediate withdrawal of the sum invested.

A report from the Audit Commission also accepts that the error was genuine and that there was no suggestion or suspicion of fraudulent activity.

123 councils lost money in the Icelandic bank collapse and many are still looking to recapture their losses.

There is an ongoing court case in Iceland which is hoped will lead to Stoke-on-Trent City Council recouping 95% of their losses along with the other authorities affected.

The unopened email will have no bearing on the court case.

The error occurred two years ago and was reported to the relevant director. It was referred to the Council Manager who in turn briefed the elected mayor. This was the correct procedure for the system of governance at the time.

No other EMB member or council politicians were made aware of the error.

The council insist that procedures have been amended and tightened including more staff being given access to credit updates. Treasury officers can no longer sign off investments of this size and more rules have been implemented to protect future investments.

The full Audit Report can be viewed by clicking the link below.

Listen to the Audio Interview below with the Cabinet Member for Resources Kieran Clarke, who explains what went wrong and whether the officer responsible is still employed by the City Council.