Agenda item

To consider any matters arising from the minutes of the previous meeting.

Report on i4B Holdings Ltd and First Wave Housing Ltd

(Item 5 of the minutes of the minutes of the previous meeting)

It was noted that an update on the operation of the Council’s wholly owned companies – i4B Holdings Ltd and First Wave Housing Ltd, would be provided either at the February 2019 or the March 2019 meeting of the Committee.

Independent Advisor to the Committee

(Item 5 of the minutes of the minutes of the previous meeting)

Conrad Hall (the Council’s Chief Finance Officer) informed the Committee that he had approached leading recruitment agencies in the field. A job advertisement was expected to go out either in late December 2018 or early January 2019. Mr Hall said that he would discuss the details of the recruitment process with the Chair and the Vice-Chair of the Committee.

Risk Management Framework Review

(Item 5 of the minutes of the minutes of the previous meeting)

It was noted that an update on the Risk Management Framework Review would be provided at the meeting of the Committee on 5 February 2019.

Lender Option Borrower Option Loans

Mr Hall noted that KPMG (the Council’s former External Auditor) were still considering the objection to the Council’s accounts that had been raised in respect to the Council’s Lender Option Borrower Option (LOBO) loans. Mr Hall explained that KPMG had emailed him earlier that day to explain that they were looking to issue their provisional view in January 2019 and Mr Hall, therefore, expected that he would be able to provide an update to the Committee at the meeting on 5 February 2019.

Paul Dossett (Partner, Grant Thornton – External Audit) explained the process in detail – after the auditor had issued their provisional view, the objector and the Council would usually have 20 working days to respond. The auditor then took into account whether the points that had been raised were substantive and would issue their final view. Once this had happened, the objector could not raise any further points of legality unless they took their objection via appeal to the court system at their expense within 21 days. He referred to his experience and noted that his understanding was in cases where there were had not been complications in taking out the LOBOs, auditors had not found the process to be unlawful. However, in other instances, such as when inverse LOBOs had been taken out, work on some objections continued, but his understanding was judgement was likely to be that the LOBOs had been taken out without this being contrary to the interests of the local authorities at the time.

Mr Hall provided more information about the nature of the LOBOs, pointing out that these were transactions in which the Local Authority had entered in the late 1990s and early 2000s, with the most recent one being about ten years old. The objection that had been made to the Council’s accounts argued that the decisions to enter into the LOBO contracts were unreasonable and called on the auditor to take action. Although it had been difficult to locate some documents related to the decisions taken to enter into the loans the auditor now had everything that Brent had been available to locate. The evidence that was available showed that Brent had withdrawn substantially less money than other local authorities. Furthermore, the Council had recently been able to redeem one of the LOBOs at favourable terms.

An Independent Member asked whether the transaction was ultra vires, and Mr Hall replied that the Objector contended that this was or may be the case, which would be for the auditor to determine.

A Member commented that some local authorities, like the London Borough of Croydon, had used money from the Public Works Loan Board (PWLB) to repay their LOBOs and asked whether more information on the issue could be provided at the next meeting of the Committee on 5 February 2019.