Independent audit of failed £10 million loan to Northampton Town reveals "serious failings" by borough council

The loan of £10 million by Northampton Borough Council to Northampton Town "demonstrated poor decision making" and had a "near complete lack of an approved business case", an independent report published on Wednesday evening has concluded.

The report, carried out by external auditor KPMG, has listed a series of recommendations following its investigations. It has been published in full on the council's website.

KPMG was looking into the background of the borough council loaning public money to the football club in 2013 and 2014.

Borough council did not see business case for Northampton Town expansion plans until after loan was approved, report revealsBorough council continued to loan money to Northampton Town "even when it was obvious something was seriously wrong", report statesTonight, the borough council says it is now considering the contents of the Public Interest Report and will present a full response next month.

The report by KPMG runs to 32 pages. In its conclusion, the report states: "We have identified what in KPMG’s view are serious failings in the Council’s arrangements when deciding to and subsequently making the loan to NTFC.

"This whole episode demonstrates poor decision making based on inadequate reports leading to public money being lost, and demonstrates the need for careful thought, structure, independent advice and monitoring in making such decisions on a transaction which was significant and unusual.

"There was a near complete lack of an approved business case, appropriate independent advice and documented risk management and proper governance process followed. Documents presented to Members for decision making purposes and records of decisions taken by officers were deficient. This is further demonstrated by the significant time taken by the Council in retrospectively gathering and providing information and evidence to us, which in itself points to inadequate governance, poor risk and poor performance management.

"Similarly, the fact that thousands of emails and sources of evidence had to be provided to us to attempt to demonstrate proper governance procedures were followed demonstrates the lack of ownership and the lack of an adequate control of the process," the report says.

"Whilst carrying out our review, we have identified areas for improvement in the Council’s arrangements, particularly in relation to procedures and practices across the Council. The Council has taken some steps to address a number of these areas already," the report added.

In response, a spokesperson for Northampton Borough Council said: "We have today received a Public Interest Report from our former external auditor, KPMG, regarding the circumstances surrounding money loaned to Northampton Town Football Club between 2013 and 2014.

"The report contains a series of recommendations for where KPMG feels the council’s processes at that time should have been more prudent and how they might be improved.

"Many of these recommendations have already been addressed as a result of work we undertook following a similar report published by our then internal auditor, PwC, in late 2016. Our current internal auditor, BDO, has since built on that work to ensure our policies and processes are as robust as possible.

"We are in the process of carefully considering the contents of the Public Interest Report and will present a full response at our Council meeting on 22 February."

More reports to follow.