Best case scenario: This time next year, KCC will still have £29 million frozen in Iceland (Canterbury & Whitstable Liberal Democrats)

Canterbury & Whitstable Liberal Democrats <info@cantlibdem.org.uk>

Best case scenario: This time next year, KCC will still have £29 million frozen in Iceland

May 19, 2009 9:48 AM

Kent County Council's statement (18 May) on its chances of recovering the £50 million pounds frozen in Icelandic banks is "worryingly misleading" says Guy Voizey. The statement gives the impression that almost all the money frozen will be returned soon and that the final package of repayments is certain. The reality is the statement is based on current best estimates from CIPFA (the public sector accountants' professional body), which in turn relies on the council's deposits being treated as preferential creditor status (which is likely to be tested in the Icelandic courts).

Analysis by CIPFA (the public sector accountants' professional body) suggests some Kent taxpayers' money will remain frozen in Iceland until 2013 and some will be lost forever. Although CIPFA expects that all the funds invested in Glitnir will be returned by March next year, any repayments from Landsbanki and Heritable will be staged over the next four years. In accounting guidance issued to council treasurers, CIPFA suggests that this time next year £28.7 million will remain frozen, out of the control of KCC. At the beginning of 2011, we will still be waiting for £18.1 million, of which at least £4.5 million may never be returned.

"We all hope the Council is successful in reclaiming the money it negligently deposited with these Icelandic banks", said Mr Voizey. "If the KCC finance team acted on the 2006 Internal Audit report, some of this money would never have been lost. Moreover, if the finance team understood the nature of the risks they were taking with our money, much of the £50 million would never have been deposited with the Icelandic banks in the first place. Unfortunately, the people of Kent will be left paying the bill for this sorry story of negligence and incompetence for years to come."