Northampton South MP David Mackintosh has called on the chief executive of the borough council to stand down after external auditors criticised the authority’s system for checking those it loaned money to.
KPMG, which is conducting a separate inquiry into the failed £10.25 million loan Northampton Borough Council made to the Cobblers in 2013 and 2014, issued the critique as part of its yearly review of the authority’s accounts last week.
The auditing firm said the council’s “due diligence process” before agreeing to grant funds to organisations was not “sufficiently formal” and went on to say the authority lacked a “consistent set of requirements”.
Now Northampton South MP David Mackintosh has called on the chief executive David Kennedy to resign. Mr Mackintosh was leader of the council at the time of the loan and has, himself, been criticised by opposition politicians for his role in the failed deal.
The Conservative MP actively led calls to loan Northampton Town the funds but he claims the lack of due diligence checks around the club’s ability to repay were not his fault as Mr Kennedy was “formally delegated responsibility” for both the loans to the Cobblers and the Saints in July 2013.
In a statement, he said: “I think KPMG is clear that the processes were not good enough and this was the realm of the chief executive as author of the cabinet report, as the person delegated responsibility in the report and the head of paid service.
“Apparently no lessons were learned after NTFC defaulted on their loan as the cabinet papers from October 2015 show that money was subsequently loaned to the cricket club under exactly the same flawed process months later when the council had a new leader.
“The chief executive is already being investigated by the Appointments and Appeals Committee for his conduct in relation to the loan, and if I were still leader then he would today be leaving the borough council.
“I am amazed he is still in a job.”
Though Northampton Borough Council has declined to give a direct response to Mr Mackintosh’s resignation calls, council leader Councillor Mary Markham said all the borough’s current creditors, including the cricket club, had not defaulted on any repayments.
The Chron questioned Mr Mackintosh as to why, as leader of the council in 2013, he did not raise any concerns around financial checking of loan recipients.
He said: “There is a clear distinction in local government between the roles of elected councillors, who set the policy and direction of the council, and officers who are highly paid specialists with responsibility for properly and legally implementing the policy set by councillors.
“While I was leader I received regular updates from the chief executive on all matters relating to the borough council including the loans but at no time did he inform me of any concerns regarding the negotiations, terms or background checks which he was conducting and which he was required to consult with me over.”
The Chron asked the borough council for a response from Mr Kennedy to Mr Mackintosh’s criticism, but a council spokesman said he would not be commenting.
The council previously said it had already put improvements in place with regards its due diligence processes.
A spokeswoman said the measures include carrying out “enhanced due diligence checks, including external scrutiny, for new loans issued, such as the loan to the University of Northampton”; “using a new checklist, on advice from KPMG, to ensure all aspects of loans are properly considered” and “initiating a thorough review, using external experts, of our governance, risk management and due diligence processes.”