BREAKING NEWS: Council apologises '˜unreservedly' for granting Â£10.25m loan to Northampton Town after damning report
Northampton Borough Council has apologised 'unreservedly' for the failings identified in a report by its internal auditor Price Waterhouse Cooper (PwC), published for the first time today.
In January, the audit committee asked PwC to review the policies and procedures followed by the borough council in making and managing the loan to NTFC.
The auditors were asked to consider any lessons learned, and to make recommendations that should be incorporated into the borough council’s procedures in the future.
The PwC report has identified several areas where the council’s management of the loan failed.
The auditors found the council’s cabinet approved the £10.25 million loan to Sixfields in 2013 - even though the club had recently made a loss of £221,555.
“Some due diligence activities were undertaken but the results from both internal and external evidence were not formalised, collated and issues identified, considered and adequately resolved before a decision was taken to provide loan finance to NTFC,” it says.
PwC says there was also no final version of the business and financial models obtained for each of NTFC’s schemes, which included developing the East Stand and a hotel facility on the site.
The authority says an action plan has already been put in place to deal with the issues already identified. Further issues raised by PwC will now be added to the action plan.
The borough council has now put the issuing of any new loans on hold pending the implementation of due diligence guidelines that have been reviewed by the council’s banker, Barclays.
A new “governance and risk management framework” will be put in place to ensure officers comply with rules on financial checks.
The audit committee has been asked to monitor the implementation of and compliance with the action plan through regular reports at every one of its meetings.
Councillor Jonathan Nunn, Leader of Northampton Borough Council, said: “First and foremost, I apologise for the past failings highlighted in our auditor’s report. The council’s management of this project fell seriously short of the standards people have a right to expect from their council, and that is wholly unacceptable.
“When the loan to the football club went so badly wrong, we asked our auditors to look at what happened and they have given us clear advice on the improvements that must be made. I accept that the council failed to manage this loan in a proper way and clear action must be taken to show that lessons have been learned.
“The council already has an action plan in place to address these failings and I have asked the chief executive to demonstrate that management controls have been strengthened. The council must reduce the chances of something going so badly wrong again.”
External auditors KPMG are still carrying out an independent review into the loan and a separate investigation into matters related to the previous management of the football club is also being carried out by Northamptonshire Police.
The PwC report will be considered by the Audit Committee at a special meeting to take place at the Guildhall at 6pm on Monday 5 December.
Updates to follow throughout the day on more details from the document.