Journalist admits his Iceland investment inquiry call has failed

A FORMER Scotsman journalist from Jedburgh has expressed “extreme disappointment” that politicians of all hues, except Tory MSP John Lamont, have failed to back his calls for an independent inquiry into Scottish Borders Council’s ill-fated investment in two failed Icelandic banks.

Bill Chisholm, who was awarded an MBE for services to his profession, has now accepted that no such probe will take place.

This follows confirmation from the spending watchdog Audit Scotland that it will take no action on the £10m that was deposited in the high-interest accounts of the Landsbanki and Heritable banks in 2008.

The audited accounts of SBC for 2009/10 reveal that the impairment (loss, including lost interest) from the investments has increased to £3.1million.

In a letter to Mr Chisholm, Bob Leishman, Audit Scotland’s portfolio manager. says: “We do not consider there is a case for any further public report at this stage.”

Although confirming that the watchdog will “continue to monitor the recovery of funds invested by SBC [and other councils] through the annual audit process”, Mr Leishman states: “The Controller of Audit is aware of the potential losses councils may incur as a result of their investment in Icelandic banks.

“Having reviewed the information in the annual audit reports of each of the councils involved, he has decided not to produce a further report for the Accounts Commission on the investment made by any single council. The decision reflects the auditors’ views on the information available to councils when decisions were made, the continuing discussion of the recovery of the sums involved and the actions taken by councils since the potential for losses emerged.”

Responding to Mr Lamont, John Baillie, chair of the Accounts Commission for Scotland to which Audit Scotland provides services, has written: “Given the view of the auditors [SBC’s external auditors apppointed by the commission] that the issues are being covered, in the circumstances the council [SBC] is best placed to provide any further information to Mr Chisholm to give a full picture of the actions they have taken on the investments.”

Mr Chisholm had prepared a dossier on the investments, focusing particularly on when they were made, after a series of freedom of information (FoI) requests to SBC. He sent it to politicians, including local MSPs, Borders MP Michael Moore and Scottish finance minister John Swinney.

“After a great deal of detailed research, I passed my findings to them on October 27 last year with a request they either institute an inquiry or at the very least support my call for an investigation,” said Mr Chisholm this week.

“Sadly, not a single MSP or MP agreed to back that request and, in the case of Mr Swinney, he has not even acknowledged receipt of my report even though I have submitted it to him twice since.

“I am grateful to Mr Lamont for at least seeking clarification of the views from our public spending watchdogs.

“It is all extremely disappointing and I remain convinced an inquiry by the Scottish Parliament into the multi-million-pound losses by Scottish local authorities should be held.”

In his dossier, Mr Chisholm outlines the dates of the 2008 deposits from May 15 to August 22 before which two of the world’s leading credit agencies – Moody’s and Fitch – issued warnings about the Icelandic banking sector.

“In my FoI requests, I learned that elected members were unaware of these deposits in unstable banks, but have been unable to ascertain the identity of the council’s own treasury advisers who sanctioned the investments.

“Many councils across the UK were hit by the Icelandic banking crash, but I genuinely believe the Borders case is different because the investments were made so late in the day.”

SBC chief executive David Hume has denied Mr Chisholm’s allegations that the council acted negligently or recklessly, claiming that internal and external auditors had scrutinised the council’s actions and found that all processes had been properly complied with.