Boston Borough Council’s million pound loan – day 2
So many fingers
in that million
pound loan pie
You’d think that a small local authority with an equally tiny budget would deliberate long and hard before borrowing a million pounds.
It would also be equally reasonable to assume such a large loan requirement would be closely examined and subjected to rigorous discussion and debate at the highest level between councillors and officers.
Well – think again.
Documents released to a Boston Eye reader under the Freedom of Information Act show that25 years ago money could be borrowed on the say-so of an individual – and may not even have been reported.
Six years ago councillors were told: “In 1991 all treasury matters were dealt with verbally and taken on trust. The only document changing hands would be the receipt for the money when received.”
And it added: “Most authorities would have reported loans in retrospect to a committee to note but by then the deal would have been done.”
However, this appears not to have been the case, as – in a FoI response from 2011, the questioner was told: “Following a thorough search it appears that the council does not have a record of any officer recommendations made in respect of the loan agreement
“The search also failed to locate any records within the council’s minutes of a decision relating to the authorisation or entering into this loan agreement.
The loan was apparently covered by the Local Government and Housing Act 1989, Part 4, section 43, which says – somewhat vaguely – that “a local authority may borrow money for any purpose relevant to their functions under any enactment.”
A licence to fill your boots – if ever there was one!
The loan was arranged with the Scottish Provident Institution on 12th November 1990 to run for 60 years starting on 28th January 1991.
For some peculiar reason, in November 1992 Thurrock Council in Essex bought it from Scottish Provident, describing it as a “local authority bond.”
But only a month before, Boston Borough Council had made out a bond certificate to a company called NCB Trust – with a cryptic note at the foot of the page which read: “Issued in error in response to a request from Citibank. Assumption is that request related to £1,000,000 at 11 and one eighth per-cent lent by Scottish Provident 28/1/91 not £1,000,000 at 10 and fifteen-sixteenths per-cent purchased by Scottish Provident from Leamington Spa Building Society on 24/3/91.
What on earth was going on here is anyone’s guess. Surely, Boston didn’t have two £1 million loans running concurrently … or did it?
In February 1993 Boston issued a loan certificate to Thurrock Council, and on 25th Jan 1993 Thurrock transferred the loan to State Street – who have held it ever since
During this toing and froing – which involved around half-a-dozen different organisations – it seems almost inevitable that documents would go astray … and that’s what happened.
We’ll have more for you tomorrow.
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