News from Westminster Labour

Independent report blasts Conservative Westminster over £450 million investment strategy

An independent report by top accountants KPMG into Westminster City Council’s £450 million Investment strategy, following the Council’s investment of £17 million in now-failed Icelandic banks, has identified a series of weaknesses in the Council’s performance.

KPMG identified the following flaws in the way in which the Council manages its investments:

* “inconsistent counterparty limits, e.g a A/F1 rated clearing bank has a limit of £75 million whereas a counterparty rated AA/F1+ (which is of higher investment quality) has a limit of £25 million”;
* “there is no audit trail maintained for the changes made to the counterparty list such as additions, deletions and changes to credit ratings and limits”;
* “two external fund managers were contacted and both stated that they did not receive updated Counterparty Lists and had been working from lists provided over a year ago”;
* “The Council’s treasury management procedure notes were last updated in May 2006 but were not finalised and some elements remain incomplete”.

The KPMG report, which has cost Council Tax payers £37,000, also says that:

* The Council “has not made the best use of market information available to them when making investment decisions”;
* “there is limited performance measurement in place on the Council’s investments. The investment strategy does not provide clear benchmarks for measuring investment performance”;
* The Council “may obtain better rates through dealing before 9.30am, when the financial markets are most active”;
* “The Logotech system is under-utilised and the in-house team rely on Excel spreadsheets and manual processes”;
* “there has been a lack of reporting of the in-house investments to senior management”;
* “there is a need to strengthen the in-house treasury team”;
* “consideration should be given to outsourcing all of the Council’s investments”;
* “Limited reporting is in place on the Council’s investment. Improved reporting should be implemented to provide greater visibility over treasury performance”.

Councillor Paul Dimoldenberg, Leader of the Labour Group, said:

“This is a damning report exposing a catalogue of incompetence for which the Conservatives should take full responsibility. We already know that the Conservatives have put £17 million at risk because of their policy of investing in now-failed Icelandic Banks. But now we know that the management and investment of over £450 million of public money has been put at risk because of the Conservatives’ failures. Isn’t it time that Councillor Barrow, who was Cabinet Member for Finance at the time and responsible for investing Council money, took responsibility for these glaring failures?”

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