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Hertfordshire CC has appointed external auditors to investigate why the council broke its own investment rules over Icelandic banking deposits. The council has invited Pricewaterhouse-Coopers to examine its investment strategy, including the decision to deposit £28m in three troubled Icelandic banks. At the time the investments were made, a £10m deposit in Landsbanki carried a credit rating lower than the authority's internal guidance permits. Cllr David Lloyd, Hertfordshire's cabinet member for performance and resources, said: ‘We will want the review to establish how this happened and whether it will impact on any loss suffered by the council.' The Conservative-run council's leader, Robert Gordon, said he took the decision to appoint external auditors to reassure local residents that the matter was being dealt with seriously. Cllr John Metcalf, a Labour member of the authority's overview and scrutiny committee, said the council's breach of its own rules was ‘shocking'. ‘We need to… find answers to why the council did not pull the money out earlier,' he added. Meanwhile, a hurried review of Sutton LBC's treasury arrangements has concluded the authority's financial advisers did little wrong in depositing cash in Iceland, shortly before the crisis. Sutton's executives commissioned Paul Rigg, former chief executive at West Sussex CC, to review whether the council's treasury management was ‘fit for purpose' after £5.5m of the authority's funds were frozen in Heritable Plc. Mr Rigg blamed the council's woes on credit rating agencies, which has been the line pursued by the LGA since £900m of local government cash was frozen in defunct Icelandic accounts. But Mr Rigg recommended that Sutton undertook a further review of its current arrangements for financial advice.

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FINANCE

Hertfordshire calls in PwC over Iceland deposit

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