HILLINGDON is struggling to recover the £20 million it invested in failed Icelandic banks- after having a bid to capitalise the loss rejected by the Government.
Hillingdon Council are among 70 plus local authorities around the country who saw their investments disappear when the Icelandic banking system spectacularly crashed during the height of the recession in 2008.
Hillingdon had money invested in two separate banks, and has been trying to recover the lost £20 million ever since.
To date, it has been able to to recover £4.3 million, and efforts to see the rest returned have so far hit a brick wall.
Council Leader Ray Puddifoot (Con), said: "We were told at the time we should get most of our assets back."
Over 50 local authorities applied to a Government department, to allow capitalisation for the debt, allowing them to pay it off at a slow rate, in the same way it has bailed out banks such as Northern Rock.
Only 19 of these applications were approved, with Hillingdon one of the 31 to miss out, which has left the council leader angry, and ready to take the matter to a judicial review if need be.
"There seems to be no rhyme or reason, why to agree some applications and not others.
"Either you support the whole lot or you don't. It was a totally perverse decision."
"We always start one foot behind the line in Hillingdon because of the money we spend on asylum seekers, it's not fair."
In fact, Councillor Puddifoot believes the reason Hillingdon's application was rejected, was because its reserve funds of £23 million are so strong, with the Government opting to bail out the weaker councils.
So what now for Hillingdon's missing millions?
Councillor Puddifoot is confident time- and a possible change of Government- will be on their side.
"We will get an opportunity to ask again next year, and until the bank is wound up officially- likely March 2011- we won't know exactly what our losses are.
"We are confident if there is a different Government (Conservative) they will take a different view."
Preparations are being made for the worst- and the borough are not naïve enough to think they will be repaid every penny.
"Last October I took the decision to put £3 million extra in our reserves, in case we do not get all of the money back, this has been set aside to cover any potential loss."
This matches up with the council's financial report in their budget for 2010/11 which estimates when all is said and done between Hillingdon and the Government, there could still be a loss of £3 million.
"On a cash flow basis not having the money doesn't make too much of a difference, we can afford to hold on until we get the best deal, and we will not let any losses affect our front-line services."
Going back to the start, should the money have ever been invested in the Icelandic banks in the first place?
Councillor Puddifoot rejects insinuations that the council were reckless.
"These were not bad banks, they had two or three star credit ratings, it wasn't necessarily the banks themselves which originally failed, but the system around them.
"Lots of organisations as well as councils had money with them, including the Metropolitan Police and Transport for London, and nobody forsaw this happening.
"Nothing on this scale has ever happened before.
"I had a member of the public write to me and say my staff should be sacked, but what about the bankers who are still getting their bonuses?"
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