COVENTRY council is facing growing calls for an urgent investigation into where taxpayers’ money is invested overseas, after we revealed leading council figures did not know.
We and opposition leaders raised questions last week amid the Paradise Papers scandal of the super-rich and some other councils using companies in off-shore tax havens for investments.
Coventry City Council revealed some of its reserves of cash are likely to be invested internationally, via financial consultants Arlingclose.
Some of the money is combined with that of other organisations into ‘pooled funds’, to get the best return.
But finance cabinet member John Mutton and senior finance officers last week told us they were having to check on the precise whereabouts of the investments.
Council finance director Barry Hastie also claimed the complexity of the arrangements meant it was impractical to have an ethical investment policy – one which might potentially prevent funds from going into tax-avoiding schemes, or unethical and disreputable companies or regimes.
Now the council’s opposition leader, councillor Gary Ridley, who raised questions with the council last week, has today called for a full and transparent examination of the matter in an emergency meeting, with all councillors present.
He said: “We need an all-member seminar immediately to help us understand what we have invested and where.
“We then need to develop an ethical investment policy so that public money is invested carefully and honorably in a transparent way. I trust the people of Coventry with this information so why won’t the council?
“This ‘hear no evil, see no evil’ approach to investment has to stop. After the secret acquisition of Coombe Abbey recently, isn’t it time to pull back the veil of secrecy and restore public confidence?
“At a time when confidence in our public institutions has been damaged by successive scandals, transparency in public life is more important than ever before.
“How the council invests the money it holds on behalf of residents in Coventry is at the very heart of this issue.
“Local authorities hold vast sums of money on behalf of residents and that money could be invested as a force for good – but how can we be sure how it’s invested when the council seemingly doesn’t know itself?!”
Coun Ridley (Conservative, Woodlands) is also asking which of Coventry’s leading Labour councillors, if any, know the answers, one week on.
Senior officers said last week the council did not hold any direct offshore accounts for tax purposes.
They added: “The council does hold treasury investments in banks and other investment vehicles such as pooled funds which involve international investments.
“It is conceivable that at some point, such funds may hold investments in companies domiciled offshore and we have sought a response on the issue from our treasury advisors Arlingclose.
“Irrespective of whether this is the case, as far as the council is concerned, this would be purely for investment purposes and has nothing to do with tax implications which has been the focus of recent media attention.
“It is likely that the West Midlands Pension Fund will also hold similar investments and we have also sought a response from them.”
The pension fund is managed on behalf of West Midlands councils including Coventry.
Coun Mutton responded today: “I have no intention of holding a seminar and wasting officers’ time and energy. Coun Ridley has been informed that the council does not have any direct investments in offshore accounts and any pooled investments will be just that, investments, not for tax avoidance schemes.”
We also asked Coun Mutton whether he accepts there is a need for an ethical investments policy, or whether he and the council leadership accept Mr Hastie’s notion that it is not practical, given the complexities of investment vehicles such as pooled funds.
We have also requested more clarity for city taxpayers on where their money resides, more than a week after he raised the matter with officers.
Coun Mutton added: “The largest amounts of investments that I am involved with are through the West Midlands Pension Fund and we already have an ethical investment policy. I accept Barry’s view that it wouldn’t be practical due to the short time our cash balances are invested for. It is totally different to long-term investments of a sizeable nature as is the case with pension funds.”
He is also requesting further information from officers.