I sent and received these today...
Subject: RE: Your enquiry
From: "Higgins Sue" <Sue.Higgins@sutton.gov.uk>
Date: Fri, October 10, 2008 5:50 pm
To: TMR
Cc: "Martin Paul" <paul.martin@sutton.gov.uk>
Priority: Normal
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Dear Mr TMR, (with wrong spelling...
)
I'm the Council's Director with responsibility for Finance and will reply to your
questions. I understand your dissatification with my performance and that of the
Council more generally and can assure you that we are responding to the emerging and
unprescendented world economic situation with care and vigour. That said, our
Treasury Mangement Policy (TMP) sets the terms and limits for our investments and we
only invest in institutions with an A rating or higher. These investments were made
within those boundaries. Councils have a duty to be careful with public money but
also to provide value for money for its citizens, by only investing with A, AA or
AAA rated institutions we believe we balanced risk with return appropriately.
To answer your questions more specifically, we have two investments with Heritable
Bank PLC totalling £5.5m. One sum was deposited in August and the second in
September. Heritable are a UK bank and their assets are currently frozen, as you no
doubt know, with Ernst and Young appointed as administrators. We use Sector as our
Treasury advisers and Heritable were green risk / A grade rated when we made both
deposits with them. I am clear that the deposits were made within the terms and
limits set by our Treasury Management policy and were made taking the advice of
Sector. We spread our investments to minimise risk and because Heritable were A
graded we made only relatively small and short term deposits with them, the August
deposit being for 3 months and the September one for a week. We are in contact with
the bank's administrators as you would expect.
I have undertaken a review of the circumstances around these two deposits and am
satisfied that my officers acted properly and in accordance with the parameters set
by our TMP and on Sector's advice but will be undertaking a fuller review and
reporting on this to the Council's Audit Committee at its next meeting in December.
The Council also issued a press statement as soon as we became aware of the problem
on Wednesday this week. I say both of these things to reassure you that I do take
the matter of my accountability seriously and that the Council has been and is open
to this matter being subject to public scrutiny.
Please do not hesitate to come back to me if you need anything further.
Yours sincerely,
Sue
Sue Higgins, Strategic Director - Resources
London Borough of Sutton
Civic Offices, St Nicholas Way, Sutton, Surrey SM1 1EA
Tel: +44 (020 8770 5511), Fax: +44 (020 8770 5510), web site:
www.sutton.gov.uk-----Original Message-----
From: Martin Paul <Paul.Martin@sutton.gov.uk>
Sent: 10 October 2008 13:25
To: TMR
Cc: Higgins Sue
Subject: Your enquiry
Dear Mr TMR
Many thanks for your message. We will get a full response to your questions as
quickly as we can.
Regards - Paul Martin
-----Original Message-----
From: TMR
Sent: 10 October 2008 12:07
To: Martin Paul
Subject:
Dear Mr Martin,
I noticed that public money, harvested from the good citizens of Sutton by way of
Council Tax has gone missing under your watch. £5.5 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
Yours sincerely,
H/T to OH.
