Weaknesses in Warrington council's stake in Redwood Bank, say auditors

Warrington Borough Council approved spending a total of £30m buying a 33% stake in Redwood Bank in 2017

A series of "weaknesses" in the way a council invested £10m into a bank has been found by auditors.

Warrington Borough Council approved spending a total of £30m buying a 33% stake in Redwood Bank in 2017.

Auditors said there was a "lack of clarity" in the way the first £10m was invested because it could not be scrutinised, but it was not unlawful.

The council said it undertook "detailed due diligence" but acknowledged "areas for improvement".

A report found council officers invested £10m into Redwood Financial Partners Ltd instead of Redwood Bank.

The council's auditors found the move was not "contrary to law", but they said there was "a lack of clarity in the council's handling of the shift in the investment approach" because there was "no evidence" that the councillors who made the initial decision were told of the change.

The auditors added "there was therefore no ability to scrutinise or consider the alternative approach", but they said the change was not "irrational or unreasonable".

Council officials told the auditors that the change meant the council invested the same amount of money and gained the same level of influence over the bank, but had "greater security and protection" for its investment.

Review governance

The council was told to review its governance arrangements, but the auditors' report said they were "disappointed" that the council showed "no acceptance that there is any room for doubt" in the way the investment was made, which they said raised "questions as to whether those lessons will in fact be learnt".

A spokesperson for the Labour-led council said: "We are always looking to develop our processes and continually push to make improvements, and we therefore equally acknowledge areas for improvement in the report, which we have been implementing since the report was first published".

In addition to the initial £10m investment, councillors also approved a plan in 2017 to invest an additional £20m in the bank over five years.

The council invested another £2m in 2021 to help the bank detail with the challenges presented by the coronavirus pandemic.

Auditors Grant Thornton initially sought to use accounting law to block publication of their report, but it has now been released under the Freedom of Information Act.

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