The chilling cost of Haringey Council's Icelandic adventure
As someone who has frequently chided Haringey Council in the past, I will be the first to admit that the council has made significant improvements in many areas. That said, most people are now aware that Haringey Council turns out to be the second most ex
As someone who has frequently chided Haringey Council in the past, I will be the first to admit that the council has made significant improvements in many areas.
That said, most people are now aware that Haringey Council turns out to be the second most exposed council, after Kent CC, in the current financial debacle, with a whopping £37 million on deposit with Icelandic banks.
These deposits (our money) must represent a significant proportion of Haringey's total deposits.
It is therefore unacceptable for Cllr George Meehan, Leader of Haringey Council, to say on Haringey Council's website: "Frontline council services will not be affected because we have sound and prudent financial management in place to protect against such risks."
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Irrespective of these statements, it will have an impact in the long-term on the financial health of the borough and its residents. Haringey obviously took a gamble on the very high rates and contingent high risks being offered by Icelandic banks, ignoring the old adage that if something is too good to be true, then it probably isn't true.
Compare this with the prudence of Brighton and Hove City Council, which suspended transactions with one Icelandic bank a year ago following concerns about that country's banks expanding too rapidly.
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Numerous credit rating agencies were ringing warning bells about Icelandic banks several months ago, and I for one would like to know why did our council officers ignore these warnings?
This seems to be just another example of financial mis-management by Haringey Borough Council, that has shown no such awareness.
Sir Martin Jacob, former director of the Bank of England, has stated that: "It is incomprehensible how a Chief Financial Officer of a local authority, who is paid a large sum of money, could have put this kind of money with Icelandic banks, preferring a very marginally higher return, to safety. A trustee of public money, looking only at the fact that a bank is licensed to accept deposits from the UK, without looking at the soundness of the institution and its ability to repay, is absolutely falling down on the job."
I trust that there will be no bonuses paid to any of its senior finance officers for this failure and that Haringey's Chief Finance Officer, Gerald Almeroth, is now seriously considering his position.
Hornsey Lane Gardens, N6