News from Westminster Labour

Westminster Conservatives ignored warnings about Icelandic bank investment

Freedom of Information revelations uncover latest twist in Westminster Council’s Icelandic Bank saga.

£3.2 million of the £17 million invested by Westminster City Council in the now-failed Icelandic bank Landisbanki – and now at risk – was invested in August 2008, even though the Council’s Treasury Management advisers, Sector, had told the Council in 13th May 2008 that credit ratings agency Fitch had assigned a negative outlook to Landisbanki in terms of its long term A rating. This would mean that the downgrading of Landsbanki’s credit rating was a possibility.

The advice from Sector also said that “the risks of a hard landing for the Icelandic economy have increased.”

This new information has recently been released following a Freedom of Information Act request to Caerphilly Council who were also advised by Sector and had also invested heavily in now-failed Icelandic Banks.

Councillor Paul Dimoldenberg, Leader of the Labour Group said:

“This latest revelations shows the depths of Westminster Conservatives’ financial incompetence. Even though they had received clear warnings from the Council’s specialist financial advisers, the Conservatives continued to invest in Icelandic Banks and the result is that over £3 million has been put at risk. In all, £17 million of residents’ money has been put at risk by the Council’s foolish decision to invest in now-failed Icelandic Banks.”

“Surely, after receiving these warnings, any financially prudent organization in charge of looking after public money would have steered clear of Landisbanki and other Icelandic Banks and invested the money in safer institutions. But, of course, Westminster Conservatives always know better than anyone else and the result has been a £17 million ‘black hole’ in the Council’s finances.”

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