Northampton council censured for loan to football club
0Auditors have slammed due diligence at Northampton Borough Council after investigating a £10.25m loan made by the authority to the town’s football club.
In 2013, the council agreed to lend the money to Northampton Town Football Club (NTFC), known as The Cobblers, to carry out works to improve its Sixfields stadium and develop a hotel.
However, the club then passed the cash onto developer 1st Land Ltd, set up to carry out the work. This company was placed in administration in February 2015 after failing to pay a contractor, Buckingham Group Contracting Limited.
Papers from auditor KPMG presented to a meeting of the council this week said: “Our initial findings indicate that there is an insufficiently systematic, robust, and objective due diligence process, and framework within which decisions can be made or documented.
“We are therefore unable to state that Northampton Borough Council had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people. As a result we will issue an adverse value for money opinion.”
KPMG said it has received an objection to the authority’s accounts in relation to the loan, and that it could not issue an audit certificate until completing its investigations.
The auditor said that it was still working on investigating risks surrounding four other loans totalling more than £50m, made to other organisations.
Mary Markham, leader of Northampton Borough Council, said: “We have already put a number of improvements in place to tackle the issues raised in this report, and we intend to make further changes in how we do things as we review our processes in the wake of the loan.
“I will put in place a rigorous system with a set process that must be followed in every case, which identifies who is responsible for every stage of the process and that records that each stage has been followed and properly signed off.”
She said the council is now carrying out enhanced due diligence checks, introducing a a checklist to ensure loans are properly considered, and a review of the council’s governance, risk management and due diligence process.
She said that the council is still pursuing the £10.25m it is owed by the football club.
In addition, the police have been asked to investigate the matter, with a spokesperson for the force in Northamptonshire saying that it is “conducting an independent and far reaching investigation into all aspects of the loss of £10.25m of public money in the Sixfields development.
“This is a complex investigation into a wide range of interconnected activities and events that took place over a number of years and it is unlikely to report before mid-2017.
“The investigation it is being conducted within a confidential environment to maintain integrity and independence.”
