WARRINGTON Borough Council Leader Cllr Russ Bowden says he expects the council’s 2017/18 accounts, delayed by a controversial £30m investment in Redwood Bank, to be signed off by auditors by the end of the month.
He also questioned the motives of those who were continuing to object saying they were moving into “mischievous territory” which had already cost the public purse a six-figure sum.
Defending the council’s decision to invest in a holding company Redwood Financial Partners Ltd (“RFPL”) he said the council expected to get the due returns they had expected and had been given legal advice, that the most robust way to secure a return was to invest in the holding company.
He also defended the council’s investments which had “held up very well” despite the current impact of COVID-19 on the economy, singling out Birchwood Park as a strong performer.
The council’s investments had brought in £20m to help fund council services.
“All investments are holding up well and they are pretty much providing the level of income we expected.
“The investment in Redwood Bank involves a commercial bank and a difficult proposition for people to get their heads around.
“We always have made it clear our policy to invest was to provide much-needed investment for businesses in the Warrington area and wider region.
“We bought shares but don’t have any dealings in the day to day runnings and we expect to get the due returns we expected.”
Cllr Bowden added that the council’s auditors Grant Thornton had said they would be looking to get the accounts signed off by the end of the month, which would in turn resolve the objection to the 2018-19 accounts.
“It has never been a case of the council not signing off the accounts which are legally published and completed and available for inspection on the council website.
“People have a right to object but it causes a significant increase in costs – a six-figure sum. I am now starting to question people’s motives for objecting and can they justify the objections which are now running into mischievous territory? It is time to stop the sport now of objecting!”
He added: It is a complex investment but fortunately the Bank of England doesn’t just let anyone set up a bank. I expect it to be a very strong investment.”
Cllr Bowden was talking about the council’s investments after announcing a pause of the Local Plan. (see below)
8 Comments
Some of it might well be ‘mischievous’, ie maybe getting to be a bit party-political with some opportunistic bandwagon-jumping in the later stages, but it’s very right that residents can question WBC investments. The total amounts are high. Risk is high for some, Redwood and the energy companies spring to mind there.
Cllr Bowden isn’t averse to objecting when it suits as we’ve seen regarding Stretton.
This isn’t an open council executive. If it had been it’s hard to imagine six-figure sums being necessary. The fact it’s taken so long to not quite resolve and involved large sums in fees and costs suggests there was more substance than can be dismissed as ‘mischief’.
There’s an interesting few months on the way.
Time to stop the “sport of pretending to be transparent” Russ
This guy is clearly not stupid but is either acting like it or believes we are!
If he and his cohorts didn’t do things which were so objectionable we wouldn’t object, its simple. The case in point is the council’s accounts and a VALID objection by a resident from which their own Auditor cannot state that the council has acted legally in relation to Redwood bank.
The hypocrisy is staggering as he objects to, and blames everything on, government action.
Clearly in his warped mind he is the only one allowed an opinion and everyone else’s isn’t worth a carrot!
Spot on I agree with you.
test prior to comment
Russ,
Please don’t insult our intelligence. The investment in a commercial bank is not a difficult proposition to get our minds around. Banking is essentially a simple business. Borrow money at x % interest and lend it at x + y % interest ensuring that the y% covers your costs and you’re in business.
You also completely misunderstand the reasons why you had to invest in a holding company. Ask your own auditors if you don’t believe me. It was nothing to do with that being the “most robust way to secure a return” and all to do with meeting the EU’s Capital Adequacy regulations. Your initial chosen path of investing directly in Redwood Bank Ltd was eventually shown to be problematic because of the regulations.
Unfortunately this resulted in WBC not acquiring a 33% share in a bank. We bought a share in a company which only held 90% of a bank. The Executive Cabinet minute which had authorised a 33% share in a bank was immediately breached and we ended up with a beneficial interest in a bank of just 29.7%
Apart from anything else it’s extremely hard to see why this is a good commercial deal. It may or may not be legal, only a court (not Grant Thornton) can determine that.
You have often made the point that WBC were paying a premium for investing in bank. That is true but can you explain with a straight face why we have paid a 13 x premium over and above the price other shareholders have paid. At the time we bought into the bank it was only capitalised with £686,405. We then added £30m for a 33% shareholding whilst the other shareholders added a mere £3.9m for a 67% shareholding. Now please explain why that is a good commercial deal. Would the other shareholders have really said no had you asked for a larger shareholding? Did any of those negotiating the deal even ask?
Yes the investment was predicated on the promise that local SME’s would benefit but the last numbers available suggest that only 19% has ended up in Warrington and the North West which means that less than this is with Warrington SMEs
You are correct. You don’t have any knowledge of the day to day running. Neither should you. But why didn’t someone take a seat on the board that you had been offered? It’s rather a limp excuse to first be told there was no one capable and then for Lynton Green to say that as section 151 officer he couldn’t be a Board director because he may be faced with a conflict of interest with some matters. Such conflicts happen all the time with Councillors who sit on committees, they just stand aside for that one particular matter, why couldn’t Lynton Green have done the same? Why were there no other officers, staff or even councillors capable of sitting on the Board?
Even now after GT have published their Report on the 2017/18 objection the council are refusing to make it public as they are entitled to do. I think we both know why and this simply confirms the lack of transparency that flows through all the nooks and crannies of this administration. Francis Pym famously warned Margaret Thatcher of the risks inherent in any overweaning administration that does not listen to other voices. WBC reached this point a long time ago.
The only reason, and I mean the only reason the council have faced statutory objections is because you have failed to engage and explain in any serious way when asked quite reasonable questions. Had serious explanations been given to questions asked back in 2018 and had a Freedom of Information Request not been delayed for 18 months when the statutory requirement is 20 days, and had the Shareholders Agreement been released without redactions (subsequently unredacted when appealed) in a more timely fashion then in all likelihood there may have been no objections had credible answers been given.
The Council have only themselves to answer to.
Our losses to date on Redwood are £21.3 million. Out of a £30 million investment. I’ll say that again. We invested £30 million and at the last accounting (published earlier this week) it was worth just £8.7 million. That’s not including interest payments on the £30 million, so the true figure is worse.
Maybe Redwood Bank will eventually make a fortune and our small percentage of that will prove to have been a sound investment. I don’t think it;s unreasonable for citizens to ask where their money has gone. This is only one of a large portfolio of investments by WBC, all hidden behind ‘confidentiality’.
Richard Buttrey makes sound points. If the citizens of this town had been treated with respect then we wouldn’t be pressing for answers.
Just one further comment Russ in case you pass by here.
You kindly acknowledge that “People have a right to object ….–”, and go on to say it “it causes a significant increase in costs”.
Just because someone objects it does not mean that Grant Thornton accept have to accept that objection. It only results in costs if they believe there is some merit in it.
They can reject it if they believe it vexatious or frivolous or if the cost of the auditor considering the objection would be disproportionate to the sums to which the objection relates.
If an objection is taken forward then it has already passed a basic hurdle and the auditor clearly believes there are matters which need to be considered.