Uttlesford hopes to get 95 per cent of lost millions in Landsbanki
A LEGAL battle that could see Uttlesford finally begin to recover millions lost in a collapsed Icelandic bank is underway this week.
The district council is among a quarter of all local authorities, as well as the Audit Commission and other government bodies, contesting a court action being bought by investors with money tied up in Landsbanki.
The council invested �2.2 million of taxpayers’ money in the bank but lost the cash after the bank went insolvent in October 2008. Since then a protracted legal wrangle means that refunds have been in limbo.
Now, after more than two years of fighting, the court in Iceland is being asked to rule whether the council is to be considered as a preferred creditor.
And indications are looking favourable. The Local Government Association (LGA) – who is fighting the case on behalf of the local authorities with money tied up in Landsbanki – has suggested that Uttlesford can expect 93 per cent of its deposit back. The Chartered Institute of Public Finance and Accountancy’s latest estimate is a 95 per cent return.
UDC’s assistant chief executive finance officer Stephen Joyce said: “There is strong confidence from our legal representatives that we will get 93 to 95 per cent back and, although there is a small chance that something could go wrong, I don’t expect there to be a problem. This is not a new risk because we have been prepared since October 2008.”
In the worst case scenario Uttlesford – which has since operated a strict UK-only policy when depositing its money – could be facing a �2.2 million write off against its accounts.
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Yet in the most likely scenario, it can still expect to write off about �200,000, a figure that Mr Joyce believes the council is well prepared to cope with.
“That figure can be accommodated without any impact on services and should not concern the taxpayer,” he said.
“We have put money to one side in case we have to write of cash necessarily.
“If we do get money back, that money we have put aside as contingency can be made available for other things. It could be spent on new projects.”
Although the court case is expected to end today (Friday Feb 18), it is likely to be several weeks before a decision is made. Then, with a subsequent appeal probable by either unsuccessful party, it will be into the summer before a final decision is reached.