PUBLISHED: 15:58 15 October 2008 | UPDATED: 10:11 23 August 2010
AN INDEPENDENT review is underway after £50 million of taxpayers money was invested in the collapsed Icelandic banking system. On Monday Nick Chard, Kent County Council s (KCC) cabinet member for finance, confirmed the review will look at whether finance
AN INDEPENDENT review is underway after £50 million of taxpayers' money was invested in the collapsed Icelandic banking system. On Monday Nick Chard, Kent County Council's (KCC) cabinet member for finance, confirmed the review will look at whether finance experts at KCC followed procedure correctly. Mr Chard revealed the council's London-based financial adviser, Butlers, faced scrutiny but said council bosses will wait for the results before they consider their position. He said: "We have asked for an external review by PricewaterhouseCoopers. They will carry out an independent review of our processes by the end of this week, and Butlers are included in that."
When asked whether he was going to reconsider the financial adviser's position, he said: "Let's wait and see what the review says. Once we have the results we shall consider it." Last week, Chancellor Alistair Darling announced the government would guarantee all private savings in Icelandic banks Kaupthing Edge, Icesave and Heritable Bank. But he said he would not do the same for local authorities and businesses, saying they are more informed investors.
KCC's £50 million is deposited in three banks - £15m in Glitnir, £17m in Landsbanki and £18m in the Heritable Bank, which is domiciled in the UK. Separate to the £50 million, KCC also invested £11.1 million of Kent Police Authority funds into Icelandic banks. A force spokesperson said: "This money is a small proportion of our total assets and there are no short-term liquidity problems for the force." Although a number of local authorities have been severely hit by the global crisis, two north Kent councils have escaped unscathed. Dartford Borough Council revealed they had been advised against banking in Iceland for the last two years.
A spokesperson said: "This follows a strategic decision to exclude lending to these institutions on advice from Arlingclose, the treasury advisers to the council."
Gravesham Borough Council confirmed they had not invested with any Icelandic banks but said they were not specifically advised against it.
Defending KCC's position Mr Chard added: "Our current position is that we haven't lost any money, it's only that we cannot retrieve the money that we have on deposit.
"We are going to make sure we get the money back." A Local Government Association spokesperson said: "We are battling for all the councils to get their money back."
Labour MP for Dartford, Dr Howard Stoate, said: "If it hadn't been for Gordon Brown's quick-thinking and courage, I can't think what would have happened. He has probably saved the financial world." When asked if it was reckless of KCC to invest with Icelandic banks, Dr Stoate added: "If something sounds too good to be true, it usually is.
Conservative MP for Gravesham, Adam Holloway, said: "I'm worried about my constituents who are working themselves into the ground.
"Historically things always get better. My advice would be don't panic.