Liberal Democrats demand independent investigation into Icelandic bank deposits

12.00.00am BST (GMT +0100) Tue 14th Oct 2008

It has emerged that Haringey Council was investing new money in Icelandic banks as recently as 29th September 2008, in news that have caused Liberal Democrat councillors to demand a independent inquiry into the fate of £37m of taxpayers' money.

The news emerged last night as Labour leader Cllr George Meehan tried to defend the investment of Haringey's taxpayers' funds totalling £37m in three failed Icelandic banks. Liberal Democrat councillor Robert Gorrie has demanded a full independent investigation into deposits in Glitner (£2 million), Heritable (£19.8 million) and Landsbanki (£15.2 million) saying he found it extraordinary that the cash was invested so recently when other councils had pulled out a year ago because of market concerns about the Icelandic institutions.

A full explanation is also needed as to why £35 million was invested in the same institution following statements by Cllr Meehan that, "he had asked the same question", but was unable to answer it.

Cllr Gorrie said that excuses that the Council was following advice from economic experts and the government would not wash. He pointed out that the majority of local authorities were not exposed to this crisis and Haringey's exposure per tax payer was one of the highest in the country.

Liberal Democrats have vowed leave no stone unturned in their questions to the Council to get to the bottom of Haringey's unprecedented exposure to the banking crisis.

Cllr Robert Gorrie, Liberal Democrat Leader and Resources Spokesperson, commented:

"What is clear is that the Council has been caught up in a financial storm that has uncovered real failings in the Council's economic leadership.

"Haringey Council were typically slow to reassure residents and are still drip feeding the bare minimum of information out to the public. Repeated suggestions that losing £37 million will not impact future spending plans are simply ludicrous. This loss is almost 10 per cent of the Council's annual expenditure on services or more than 30 per cent of the Council's own annual Capital Expenditure. Something will not get done as a result of this loss and the Council need to be honest with residents where and when that cut will fall.

"I find it inexcusable that the Council deposited money in these banks just over two weeks ago when most knew that doubt was circling the Icelandic banks.

"We must now have a full and independent investigation to get to the bottom of the decisions made to invest in these banks so the responsible parties can be properly held to account. Every pound needs to be accounted for and all residents' worries need to be put to rest."

ENDS