Council defends Icelandic banking

Redcar and Cleveland council has defended its decision to put money into Icelandic banks just days before they went bust.

It was one of seven councils criticised by the Audit Commission for breaching official guidelines by investing after credit ratings were downgraded.

The council said it had carried out an internal review which found it had done nothing wrong.

Attempts were also being made to recover the total investment of £6m.

The situation had not impacted on council tax levels or agreed levels of services.

Volatile circumstances

Councillor Peter Scott, cabinet member for corporate resources, said: "We conducted a full internal audit investigation into the investments placed with Icelandic banks in 2008 and this concluded there was no breach of policy and procedures.

"Given the volatility of the current economic climate, the investigation did recommend that a review be undertaken of our policies and procedures and this review was immediately implemented.

"Now we will give very careful consideration to the latest Audit Commission report to see if we need to make any further improvements."

Mr Scott added: "The fact that even the Audit Commission have Icelandic investments, illustrates the profound and volatile circumstances local authorities face at this time."

In total, 127 local authorities had money invested with Icelandic banks at the time of their collapse, amounting to £953 million.

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