COUNCIL taxpayers’ money invested in a failed Icelandic bank has been lost, a top councillor has warned.
Kirklees Council’s deputy leader said that not all of the £1m deposited with Landsbanki would be recovered.
Clr Kath Pinnock said: “It doesn’t seem likely that every penny will be returned to the council but I think a greater part of the £1m will be coming back.”
Nearly £1bn of public money – including £1m from Kirklees – was put at risk when Landsbanki and another Icelandic bank, Giltnir, went bust in October.
The Local Government Association (LGA) is negotiating on behalf of dozens of councils to get the money back.
Clr Pinnock said: “According to the LGA it’s unlikely we’ll get the full £1m back. These things sometimes take years.”
Clr Pinnock also revealed that Kirklees had £3m invested in the Dunfermline Building Society, which was taken over by Nationwide late last month to prevent it collapsing.
She said: “Every penny of the £3m has been safeguarded. None of the investment is under threat.”
Kirklees has £102m invested in banks and building societies. Clr Pinnock said: “The council tries to spread its investment fairly widely so that the risk is spread. The vast majority of the money is invested in British banks and building societies.”
Clr Pinnock, who leads the Lib Dems on Kirklees, has been responsible for council finances since her party and Labour ousted the Conservatives in January.
Clr Andrew Palfreeman, who was in charge of council finances when the Tories were in power, defended his party’s record.
He said: “The Conservative administration believed the council had a duty to maximise the its investments to protect essential services and ensure that the council tax stayed at a level that reflected the current economic crisis.
“Some £1m was invested in Landsbanki in January 2008 in a fixed-term one-year deposit. At that time there was no reason to believe that the money was at risk. However, as months passed the Icelandic risks became more apparent and, on the advice of our very professional finance officers, no further sums were invested in that country.
“That is in contrast with many other councils who continued to invest in Iceland.”
Clr Palfreeman added that Clr Pinnock was making “vacuous political points” about the £1m invested in Landsbanki.
But Clr Pinnock said the Conservative councillor “didn’t have a leg to stand on” when it came to council investment.