This Monday at the Audit Committee there is a KPMG report (the external auditors of Northampton Borough Council) and it gives initial comments on the NTFC loan, pages 19 and 23 respectively.
It seems that not only was there insufficient processes and scrutiny inside the Borough Council on the NTFC loan but on other loans as well such as the Saints, Cosworth and the University of Northampton. Thankfully these creditors have repaid or are repaying their loans in full.
A couple of extracts from KPMG document, page 23, say the following:
“There is no systematic formalised system of recording or documenting the due diligence process or results arising from the loan approval process. This includes the assessment of business cases, evidence to support key decisions made, any challenge put forward by the Authority to the loan applicant, and the Authority’s internal review and approval process. The Authority had significant difficulty in obtaining the evidence required to substantiate this decision-making process.”
“There is evidence that the due diligence process is not sufficiently formal nor are there a consistent set of requirements. This includes the lack of assessments regarding historic trading performance, cash flow, working capital requirements, sensitivity analysis etc.”
Cllr Elizabeth Gowen, Labour Shadow Cabinet Member for Finance, said:
“These initial comments from KPMG are devastating. It indicates that there were insufficient formal processes in place inside the Council when putting together and approving the NTFC loan. However, this applies not just to NTFC loan but other loans as well, such as to the Saints, University and Cosworth. Thankfully these creditors were okay and have repaid or are repaying in full but the fact remains the Council took a big gamble with taxpayers’ money. It seems that KPMG is far from satisfied with the way the Council went about issuing these loans. Not having robust due diligence processes in place is a serious matter.
This whole NTFC loan is still having serious repercussions to this very day. Prior to May 2015 the Tories made a string of commitments to the people of Northampton that so far have not been fulfilled. The sale of the Sekhemka statue was meant to pay for a town centre museum expansion, it hasn’t happened. There is meant to be 100 new council homes at Dallington Grange, it hasn’t happened. The Council was going to set up its own social lettings agency, it hasn’t happened. The ‘Northampton Alive’ project is no longer promoted with much energy and no new materials are being produced for it. The agenda to drive the town forward has suffered as some people inside the Borough Council are so preoccupied with the NTFC loan fallout they have taken their eye of the ball with other important things.”
The final KPMG report is yet to finished and published.