A decision to draw an extra £500,000 from Northampton Borough Council’s reserves to help recover a missing £10.25 million loan has been called in by the opposition leader.
Councilor Danielle Stone (Lab, Castle) has written a formal objection to auditors KPMG about the decision taken on Wednesday night’s cabinet meeting.
Tory councillors voted in favour of using an extra £500,000 from its long-term savings so it can pay for legal fees in recovering the missing £10.25 million loan to Northampton Town.
But there were protests from opposition members at that meeting.
And Labour has also asked KPMG to draw up a report as it believes the decision to hand over £10.25 million was “wholly unreasonable and irrational”. Councillor Danielle Stone, leader of the Labour Group, said: ““We are determined to get answers on what went wrong with the multi-million pound loan to Northampton Town Football Club. I have written to the external auditor of KPMG with my serious concerns and I am asking them to do a Public Interest Report.
“They have assured me they are carrying out investigations about what precisely went wrong inside Northampton Borough Council. I hope Northampton Borough Council gives them their full cooperation.
“Furthermore we are concerned that Northampton Borough Council is urgently spending more and more money on legal costs in trying to salvage their reputation.
“The other day cabinet authorised the additional expenditure of £500,000 on top of £450,000 that has already been spent. How much more will Northampton Borough Council need? We need to try and get the money back but they don’t seem to have a plan on how to do this other than spend increasing sums on lawyers,” Councillor Stone added.
The Labour group has raised five questions it wants answering:
* How is the figure of £500,000 derived?
* Where is the detail in how the £500,000 would be spent?
* The land around NTFC was the security for the £10.25 million loan. Why then is recovery necessary? Collateral is the surety
* So far Northampton Borough Council has not been successful in recovering the loan and therefore there is a serious risk this £500,000 will not be recovered.
* What is a realistic expectation of how much of the monies with be recovered?”
Speaking at Wednesday night’s cabinet meeting, leader of the council, Councillor Mary Markham (Con, Park) defended the need to take the funds from the savings pot - which currently stands at around £22 million.
She said that the council may well make all £10.25 million back by selling on the land around Sixfields to developers, of which she claimed there are interested buyers.
But she said the will to pursue the lost money was also about getting justice for the taxpayer.
“It’s easy on your side of the line saying - ’we don’t agree with you spending any more’.” She said.
“I ask you to give some credit to our officers.
“We are not going to be spending up to a million only to get back half a million.
“We don’t believe we need as much as the £500,000, but we can’t keep coming back and asking for more money in stages.”
And she added; “We are talking to interested parties (in buying the land).
“And let me tell you that would return all of the money. It doesn’t mean we shouldn’t chase the debt.”
Councillor Markham said that, so far, the council has had to hire lawyers as part of the liquidation of 1st Land - the development company set up to oversee the stadium rebuild at Sixields.
She said litigation fees in seizing some of former Cobblers chairman David Cardoza’s assets had also proved costly.
Some of the legal representation, she said is on a no-win-no-fee basis.
The opposition call-in is expected to be made in the next few days.