Council in turmoil over Icelandic bank losses

11.50.01pm GMT Tue 10th Mar 2009

Barnet Council deposited £27m in Icelandic banks, and may never recover this money

Barnet Liberal Democrats are calling on the Leader of the Council to accept his responsibility and resign rather than leave junior staff to shoulder the blame for the Council's £27m losses in Icelandic banks.

A council report has revealed the Council failed to follow correct procedures when depositing £27.4million in collapsed Icelandic banks. Treasury manager Patrick Towey has resigned following revelations that he ignored approved credit rating criteria when making the deposits, leading to millions of pounds being frozen in unstable Icelandic accounts.

But Lib Dem group leader, Councillor Jack Cohen, said it "beggared belief" that Mr Freer, who once worked for Barclays Bank plc, was not taking responsibility for the mistakes and called for him to step down.

Cllr Cohen said: "It's all beginning to unravel. The leader has blamed everything on the officers, but he should really be examining his own position. I feel strongly he should resign.

"There is clearly no proper oversight of officers by this administration, and the leader is meant to be the cabinet member responsible for resources. All this has happened on his watch.

"He should have had a better grasp of how his council was functioning. He seems to have adopted a very laid back approach.

"We need real assurances that this sort of thing can never happen again."

The Liberal Democrats are also seeking assurances that the Council's admission that it has not followed its own procedures when making bank deposits is not the tip of an iceberg. Cllr Cohen said "We have been asking questions about the Council's involvement with the Icelandic Banks since September of last year. This is the first time we have been told that the Council itself is to blame. It beggars belief that the Council Leader is only now saying he was apparently misled by Officers. As recently as the Budget meeting last week the Leader of the Council was telling anyone who would listen that the Icelandic Bank fiasco was nothing to do with Barnet and that the Council is the victim of exceptional world economic events. A different story is now starting to emerge."