Northampton Town council loan 'not properly checked'

Northampton Town's Sixfields StadiumImage source, Getty Images
Image caption,
An internal audit by PricewaterhouseCoopers (PwC) has found the cabinet agreed the loan without seeing a full business case

A council rushed to approve a £10m loan to a football club due to "political and management" pressure, a report has found.

Northampton Town FC was given the money to redevelop its Sixfields home ground.

An audit found the local borough council lacked full information on the risks when it approved the transaction in 2013.

The authority said its management of the loan "fell seriously short" of expected standards.

Proposals for the cash included refurbishing the ground and surrounding land - including plans for a new stand, hotel and conference centre.

Most of the loan, which was arranged by the club's previous owners and the authority, remains unaccounted for.

The key findings from the PricewaterhouseCoopers (PwC) report include:

  • Due diligence checks were only carried out after the council's cabinet agreed to the loan
  • These checks found the risk of Northampton Town Football Club Ltd's failure was "high"
  • The earliest business and financial model was not produced until August 2013 - a month after the loan finance was approved
  • Three opposition councillors raised concerns about the loan's approval, but PwC has found no evidence these concerns were investigated and adequately resolved
  • There were concerns about the short timescales and pressure from management and politicians to conclude arrangements
  • PwC says "it is evident that these time pressures significantly reduced the council's ability to challenge and fully evaluate the professional advice it had obtained"
  • There was no formal monitoring of the physical progress of the construction works

The council said it it had put a hold on all loans until new guidelines were introduced.

It also said an action plan was in place to deal with issues identified both by the council itself and the PwC report.

Analysis: Matt Precey, BBC East

The council's cabinet rushing to approve the loan in July 2013 is at the heart of this fiasco.

The PwC report makes clear it didn't have enough information to properly evaluate the proposal.

No business case was presented and due diligence checks on the financial risks only happened after the decision was made.

There was pressure from politicians and senior management to get things done quickly.

The report states "email correspondence between the leader and officers highlights... the desire to conclude the transaction promptly".

As for the lack of information, PwC places the blame squarely on the former council leader David Mackintosh (now a Conservative MP), chief executive David Kennedy and the Section 151 officer, Glenn Hammons.

Jonathan Nunn, who took over as leader of Northampton Borough Council last month, said: "First and foremost, I apologise for the past failings highlighted in our auditor's report.

"The council's management of this project fell seriously short of the standards people have a right to expect from their council and that is wholly unacceptable.

"I accept that the council failed to manage this loan in a proper way and clear action must be taken to show that lessons have been learned."

Image source, Conservative Party
Image caption,
Northampton MP David Mackintosh was leader at the time of the loan

Mr Mackintosh, the leader at the time the loan was agreed and now Conservative MP for Northampton, did not respond to criticisms in the report about his own role in the loan.

He said when he became leader of the council there "had been years of frustration and waiting for key projects" adding: "Highly-paid senior officers were asked to deliver these key projects for the benefit of the town, but they were also absolutely expected to deliver them properly and in accordance with the legal responsibilities they held.

"The report published today is very clear that senior officers at (the council) failed to put proper measures and procedures in place when preparing and negotiating the Sixfields loan, which they were legally obliged to do."

A police investigation into "alleged financial irregularities" surrounding the loan is ongoing.

Around the BBC

Related Internet Links

The BBC is not responsible for the content of external sites.