Investments worth £3m to be written off by Stroud District Council (From Gazette Series)

Investments worth £3m to be written off by Stroud District Council

10:24am Monday 15th March 2010

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INVESTMENTS totalling £3 million have yet to be recovered from a failed Icelandic bank account and will be written off by Stroud District Council.

The council was rocked by the news back in October 2008 that Glitnir bank was going into administration, putting their deposits at risk.

Over a year later the money has still not been recovered despite months of legal wrangling and it is not even clear if all of it will ever be recovered.

Members of Stroud District Council’s cabinet agreed, under accounting regulations, to ‘impair’ - or write off - the losses in the current financial year, at a meeting last week.

Financial experts at the council are looking at the options, such as spreading the losses over several years, to minimise the impact.

Cllr Nigel Cooper, cabinet member for finance, said: "We still remain hopeful that we will recover the full amount of the deposit, but in line with proper accounting practice we will have to make provision for the loss in our accounts."

Cllr Cooper said that 125 other local authorities were in the same situation and that work continues to go on in recovering the full amount, however it is unlikely it will be resolved before the end of the financial year.

Stroud District Council had around £3 million pounds deposited in Glitnir bank in early 2008 when it was A-rated for credit worthiness, but in the October following the credit crunch the bank, along with others such as Landsbanki, went into administration.

The Local Government Association is working on behalf of councils across Britain to recover the billions of pounds in losses.

Also at the meeting the council was forced to write off an unpaid housing benefit debt of £38,849, which related to a resident who falsely claimed housing benefit for seven years. The overpayment was being recovered from his state pension until his death last year, when his estate was insolvent and therefore no more money can be reclaimed.

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