Borough council continued to loan money to Northampton Town "even when it was obvious something was seriously wrong", report states

An extension of the agreed £12 million to Northampton Town was increased to £13.5 million under delegated powers by senior officers at the borough council with "inadequate due diligence", the KPMG report has stated.

The report published this evening, Wednesday, was produced by external auditors, KPMG, and investigated the council's failed loan to Northampton Town in 2013 and 2014.

The Chron has already published a number of articles based on the report:

Independent audit of failed £10 million loan to Northampton Town reveals "serious failings" by borough councilBorough council did not see business case for Northampton Town expansion plans until after loan was approved, report revealsAnother section of the investigation deals with the management of the loan. It is highly critical of the processes involved.

The report says the loans were approved on July 17, 2013, and delegated powers were given to the then chief executive, in consultation with the then director of finance/section 151 officer, to approve amounts and terms of any loan finance arrangements, subject to certain conditions.

The report states that "not all the conditions were met, yet the agreements were still entered into".

The then directors of NTFC presented a business plan to the council which was then assessed by both the council and LGSS Finance. KPMG says there was, in their view, an "inadequate assessment" by the council.

"The then Chief Executive authorised loans totalling £13.5m which was in excess of the £12m quoted in the paper that was approved in principle by Cabinet," the report states.

"The Council advanced a further £1.5m for the stadium in April 2014 with inadequate due diligence undertaken by the then Director of Finance/Section 151 Officer as to why this extra money was needed nor what the previous £4.5m that had been loaned to NTFC up to that point had actually been spent on," the report added.

Officers had sought legal advice from LGSS which determined that although the background in the report referred to "up to £12m", since the recorded decision did not reference a specific figure "additional Cabinet approval was not required and entering into facility agreements for up to £13.5 million was in line with the existing decision".

KPMG's report said it believed this advice was incorrect and the decision went beyond the delegated authority.

The report goes on to say that the council continued to advance money to NTFC "even when it was obvious that something was seriously wrong".

"The Council continued to advance money to NTFC even when it was obvious that something was seriously wrong. Quite apart from the lack of progress on site, NTFC submitted a revised planning application on 1 August 2014 which significantly reduced the scale of the stadium expansion," the report said.

"The project was championed by the former Leader and, other than the points raised by three non-Cabinet Members attending Cabinet meeting, it appears to have been agreed without having been subject to any robust challenge by his fellow Cabinet Members."

The report mentions that three opposition non-Cabinet members raised concerns about the approval of the loan however, "their concerns were noted as observations and there was no record of the matter being called in to the overview and scrutiny committee".

"None of the other Cabinet Members were even aware that the Paper they approved contained a provision where it was intended that £5m of Council Taxpayers’ money loaned to NTFC was not going to be paid back," the report states.

"We were told by some of the officers and Members we interviewed as part of our review that there had been pressure to complete the deal (mainly from the Leader)," the report adds.