Opposition councillors criticised Northampton Borough Council’s handling of the lost £10.25 million loan to the Cobblers after auditors found the authority did not have a “robust” checking system in place when it handed over the funds.
In January, the firm KPMG were enlisted to look at the circumstances around the council decision to loan Northampton Town the sum through 2013 and 2014.
Papers to the meeting had already confirmed KPMG’s final report would likely reflect badly on the council.
In the documents the firm said it was “unable to state that Northampton Borough Council had proper arrangements to ensure it took properly informed decisions,” when it handed over the loan to Sixfields for a stadium development which was never completed.
Last night Councillor Sally Beardsworth (Lib Dem, Kingsthorpe) said the findings were worrying.
She said: “It seems to me that this council was acting more like a bank than a council.
“Councils are set up to deliver services to people not to lend money willy-nilly.”
She added: “It’s not our money to give away, it’s the taxpayers money.”
The meeting papers showed KPMG had serious concerns about he way the borough council was checking organisations before lending them money in 2013.
“There is evidence that the due diligence process is not sufficiently formal nor are there a consistent set of requirements,” read one section. “This includes the lack of assessments regarding historic trading performance, cash flow, working capital requirements, sensitivity analysis etc.”
Labour’s shadow cabinet member for finance, Councillor Elizabeth Gowen, issued a statement prior to the meeting expressing her concerns.
“These initial comments from KPMG are devastating,” she said.
“It indicates that there were insufficient formal processes in place inside the council when putting together and approving the NTFC loan.
“However, this applies not just to NTFC loan but other loans as well, such as to the Saints, University and Cosworth.
“Thankfully these creditors were okay and have repaid or are repaying in full but the fact remains the council took a big gamble with taxpayers’ money.
“It seems that KPMG is far from satisfied with the way the Council went about issuing these loans. Not having robust due diligence processes in place is a serious matter.”
Council leader, Councillor Mary Markham has vowed to put in place a put in place a “rigorous system” with regards handing out loans “with a set process that must be followed in every case.”
However last night Andrew Cardoza, leading the KPMG review, said the firm had experienced time delays in requesting certain information from the council. This he said is likely to put the final publication of the report back.
It may be that the KPMG report cannot come out until police conclude their own investigations into the dealings at Sixfields.
Councillor Markham said the delay in handing over documents was because the auditors asked to receive individual bits of information at a time.
“We could have given them one huge document,” she said. “But they didn’t want that.”
“Going through and locating individual documents is just not possible in a timely manner.”