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We will get back most of Iceland cash'

PUBLISHED: 17:27 20 May 2009 | UPDATED: 10:42 23 August 2010

COUNCIL bosses are confident that 90 per cent of the £50 million they deposited in the crippled Icelandic banking system will be returned. For months financial experts at Kent County Council (KCC) have been in discussions to recoup the full amount they h

COUNCIL bosses are confident that 90 per cent of the £50 million they deposited in the crippled Icelandic banking system will be returned.

For months financial experts at Kent County Council (KCC) have been in discussions to recoup the full amount they had placed in the Heritable, Glitnir and Landsbanki.

On Monday they confirmed that advisors from the Chartered Institute of Public Finance and Accountancy (CIPFA) said it was 'likely' that £45 million would be returned.

Lynda McMullan, Director of Finance at KCC, said: "This is good news for the authority. We have long been confident that we would get most of our deposits back. This has now been confirmed.

"However, we will continue to fight to get every last penny back and last week our Head of Financial Services visited Iceland again to make the case for KCC and for other local authorities with money deposited in Iceland."

CIPFA, the institute that advises local authorities on how to prepare their annual accounts has sent guidance to KCC, and all affected local authorities, on how they should account for their deposits in Icelandic banks.

In total 123 local authorities, the Audit Commission, Transport for London, the Metropolitan Police, Kent Police, Cambridge University and health trusts and charities, among others had deposits in Iceland totalling around £1 billion.

In March this year the audit commission published a report accusing KCC of 'negligence' over its investments in Icelandic banks.

The report investigating how councils came to invest hundreds of millions of pounds of taxpayers' money in Iceland said the authority failed to spot warning signs about the possible risks. It also revealed the council invested a further £5 million several days after being warned against the investment and another £3 million after finance officials failed to open an e-mail warning them against it.

This 'negligence' statement by the Audit Commission has since been retracted but they maintain the mistake should not have occurred.

Mrs McMullan added: "We are also pleased that the Audit Commission has recognised that KCC was not negligent in making its deposits in Icelandic banks and they have agreed to retract this word from their report: Risk and Return.

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