ICELANDIC INVESTMENTS STILL HAUNT CORNWALL

The Audit Commission has now reported on local authorities and their investments in Icelandic banks: Risk and return: English local authorities and the Icelandic banks, dated 26 March 2009.

It records in Table 6 (original document page 53) the deposit of £5 million made by Cornwall county council in Landsbanki which I discussed in the post Cornwall and the Icelandic bank.

It also puts the £3 million deposited by Restormel district council in Landsbanki on 1 October 2008 in Table 3 (original document page 28), along with similarly timed deposits by eight other local authorities, and describes them as “negligently deposited” and says (in paragraph 46) “these deposits breached local treasury management policies.” Restormel already had £1 million invested, making a Restormel total of £4 million in Icelandic banks (Table 6, original document page 55).

Cornwall county council’s deposit represents seven percent of its reserves and Restormel’s two hundred percent of its (Table 6).

Informative local newspaper reports on Restormel’s investment are here (28 January 2009) and here (29 January 2009).

The new unitary Cornwall council thus starts with £9 million of deposits in problematic Icelandic bank, a miserable inheritance. As the county council and Restormel district council are abolished on 31 March, I suppose holding their Icelandic investment policies to account will slide away.

It’s still unclear how much of the £9 million will be recovered or when. Oh, with what little wisdom our world is governed.
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With what little wisdom… Axel Oxenstierna (1583-1654)