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 28^th 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 25^th 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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