Auditors have issued a list of recommendations to Cornwall Council to help it avoid a repeat of what it said were “some serious failings of governance at predecessor bodies” surrounding the taking out of four Lender Option Borrower Option (LOBO) loans.
In its annual audit letter, audit firm Grant Thornton said that the council should “undertake a detailed review of its treasury management function and ensure that all decisions sheets are available and maintained as part of all decision-making processes when refinancing, taking out loans, restructuring both loans and investments”.
Other recommendations include ensuring officers present clear, transparent and detailed information to members, and seek advice from “suitably qualified and appropriate treasury advisers” at all times.
The letter said that the council should review the value for money of the four LOBO loans identified, which “appeared to have higher rates of interest attributed to them compared to the Public Works Loan Board rates at the time”.
The letter concluded: “Given the passage of time, the fact this issue is very much in the public domain and the fact that Cornwall Council has redeemed a number of LOBOs, we do not intend to take any statutory action.
“However we will be closely monitoring the council’s current investment strategy and we believe it critical that the council exercises much stronger governance arrangements than its predecessors.”
Room 151 contacted Cornwall Council for a comment on the letter but had not received a response by the time of publication.
Cornwall Council inherited the LOBO loans when it was created in 2009 through a merger between the former county council and its six boroughs and districts.
