Borough council set to spend an extra Â£500,000 of council reserves to recovery loan money to Northampton Town
Northampton Borough Council wants to spend another Â£500,000 trying to recover the Â£10.25 million loaned to Northampton Town taking the total spent so far to nearly Â£1 million.
The council revealed this morning it was asking for cabinet approval to take the additional money from council reserves.
A spokesman said: “A total of £450,000 has already been spent or committed on recovery of the debt, including on work to cancel the loans and the land agreement, and specialist insolvency and administration advice in the period before the Club was sold.
“Money has also been spent on retaining forensic accountants to scrutinise the Football Club’s financial position, to give a better understanding of where the money drawn down from the loan may have gone and give the Council the best information on how to trace and recover it,” he added.
“Now the cabinet is being asked to agree the spending of up to £500,000 more to fund the recovery of the debt.
“The spending will be monitored to ensure that there is a balance with the potential to recover the outstanding money, and that there is value for money for the taxpayer. The Council will also continue to enter into no win-no fee arrangements with lawyers where possible to minimise the financial risk.
“It is hoped that the costs will ultimately be recovered from the ongoing action to trace the money, and from the redevelopment of the land. Money recovered will be paid back into reserves,” he added.
Councillor Mary Markham, leader of Northampton Borough Council, said: “We would only ask for this money to be committed to pursuing the outstanding money if we felt that there were some clear lines for us to follow. We will monitor the spending continually to ensure that it is kept under control and only used where there is a realistic prospect of retrieving public money.”
The spokesman said the football club relinquished to the council the right to recover the outstanding money from First Land and County Developments Northampton Ltd in November 2015 as part of a sale of the club to new owners.
“Three separate investigations are taking place into the loan to the club,” he said.
“The first, an investigation by Northamptonshire Police into alleged financial mismanagement will take primacy.
“In parallel, KPMG LLP, external auditor for the borough council, is to review how the borough council managed the loan to the football club. The council’s own audit committee is also investigating.
“The request for further funding will be discussed at a meeting of the Borough Council’s Cabinet, which is held in public, on Wednesday July 13 at the Guildhall,” he added.