Councillors in Spelthorne will meet on Thursday (December 8) to formally respond to a report accusing their authority of acting unlawfully in three property acquisitions, totalling almost £230 million.
Spelthorne Borough Council, which has invested more than £1 billion in property, including Thames Tower in Reading, is obliged to respond to a public interest report (PIR) by KPMG which raised concerns about three specific acquisitions during the financial year 2017/18. The council denies it acted unlawfully.
An extraordinary meeting of the full council will take place just before the regular full council meeting on December 8, in which councillors will be asked to approve its officers’ proposed response.
The PIR addresses legal, financial and governance issues around the acquisitions of:
- 3 Roundwood Avenue, Stockley Park (pictured) for £21.4m in July 2017
- World Business Centre 4, Heathrow for £47.2m in September 2017
- Hammersmith Grove for £160m in January 2018
All three were funded by loans from the Public Works Loan Board (PWLB).
The PIR suggests the council did not have the necessary legal powers to borrow the money and acquire the three properties and that, even if it did, it did failed to give regard to relevant statutory guidance.
It suggests the council failed to follow expected industry practice, that the acquisitions were overseen by an inexperienced team and its actions exposed the authority to potentially high levels of risk.
The PIR makes five recommendations which, in the agenda for Thursday’s meeting, council officers propose agreement with.
The five recommendations are:
- That the council should get legal advice before entering unusual or high value transactions.
- That officer reports should specify legal powers relied upon in decisions or transactions and that decision makers know the relevant legal tests.
- That the council has regard to all relevant statutory guidance for transactions or record reasons for departing from it.
- That the council should bring its investments in line with the expected practice of an institutional investor.
- That the council develop an action plan as part of the management of its investment portfolio which addresses a series of what it calls weaknesses in the transactions.
The PIR states KPMG was unable to fine appropriate strategy, processes, and governance. However, the council disputes a number of claims in the PIR including the suggestion it acted unlawfully.
By choosing to produce the PIR rather than asking for a court declaration, KPMG obliges the council to respond within a month.
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