Big questions hang over council's lost millions

6.00.55pm BST (GMT +0100) Mon 13th Oct 2008

Council has big questions to answer on Icelandic investments

Conservative-run Westminster council has lost £17 million of taxpayers' money, which it had invested in Icelandic banks that have now collapsed.

The council's Conservative leader admits that nearly £10 million of that total was deposited in August - after months of warning signs about the banks:

• several credit ratings agencies had already downgraded their ratings of Icelandic banks

• other public bodies had already pulled their money out of Iceland over risk fears

• Liberal Democrat spokesman Lord Oakeshott had begun to ask searching questions about the risk to British investors of putting their money in Icelandic banks

All those warning signs happened before Westminster put nearly £10 million of taxpayers' money into the now-collapsed banks.

Local Liberal Democrat Sue Baring said, "Many people will have had their savings frozen as the Icelandic banks collapsed, but they are in no way to blame for their loss. They would not have had access to credit ratings agencies and the like."

She continued, "I would expect a council putting millions of pounds from taxpayers into foreign bank accounts however to investigate thoroughly before putting it all at risk.

"Some councils, unlike Westminster, will have made their investments before these warning signs flagged up the risk, and so are not so much at fault. As the Conservative leader of our council has admitted however, Westminster put nearly £10 million into Iceland in August - after months of warning signs."

Sue, who is the Liberal Democrat candidate in the Lancaster Gate council by-election on 23rd October, is now writing to the Leader of the Council to demand that an independent investigation is launched immediately into the questions that now hang over the council's multi-million investment in Iceland.