OPPOSITION Tory Cllrs. at Warrington Borough Council have raised further concerns over council investments after a near 50 per cent reduction in the value of shares in Redwood Bank.
At the meeting of Warrington’s Audit and Corporate Governance Committee on Thursday night, it was discovered that the Labour-led Council is now in the position of having to *write down approximately 50% of its current investment in Redwood Bank.
The revelation came, following questioning from opposition Conservative Councillors, that the investment, standing at £32M needs to be impaired by a huge £15M – £16M.
This latest blow is in addition to the current difficulties affecting one of the council’s other high-profile investments Together Energy, which is understood to be on the brink of going into administration.
Cllr. Ken Critchley, Conservative finance spokesperson, said: “The Conservative Group have been consistent in our challenging of the investment the Council made in Redwood Bank.
“We have expressed our concerns regarding the apparent disproportionate investment made by the council compared to the other shareholders, let’s not forget in the original investment the council paid £30 million for one-third of the shares and the other investors paid £5 million for 2/3 of the shares in Redwood Bank’s holding company Redwood Financial Partners Ltd.
“Now we find that the Labour-led Council are in the position where they are having to write down 50% of their current investment.
“Combined with the Together Energy debacle this raises even more serious concerns regarding the Council’s approach to investment.
“The quality of decision making, the due diligence and the effectiveness of the governance of investments are all even more keenly under the spotlight.
“The investment in Redwood Bank is costing the residents of Warrington £750K in interest alone each year and now it is worth half of what we were told it was worth. This is a matter of serious concern for every resident of Warrington.“
Councillor Mark Jervis (Con) Voiced further concerns saying: “In the light of these recent troubling developments, it is a real concern that the Labour administration is continuing its practice of not providing the Audit and Corporate Governance Committee with key information to assist its review and scrutiny role.
“Also, the Committee is unable to form a view on the effectiveness or otherwise of the Council’s Due Diligence processes in relation to the new investments and our Conservative Group is dismayed at the apparent ongoing woeful corporate governance of investments such as Together Energy.
Councillor Kath Buckley (Conservative Group Leader) added: “We have been consistent in our challenge to the high risk, high borrowing path the Labour-led Council has chosen to take the people of Warrington down.
“Now it looks as though some of these questionable investments are starting to unwind, the Labour leadership must be held to account for these investment failures.”
The council’s controlling Labour group has been contacted for a comment.
* A write down is an accounting transaction in which the value of an asset is reduced to match its current market value.