Missed Icelandic bank e-mail 'cost council £3m'

A Staffordshire council missed the chance to withdraw £3m of its savings before Landsbanki collapsed, because of an unopened e-mail, a report has said.

Stoke-on-Trent City Council received a note on 1 October 2008 about increased risks to the £5m it had deposited.

It had the chance to withdraw up to £3m before the Icelandic bank fell on 8 October, a council audit said.

The council said the e-mail was missed due to "human error" but it may not have withdrawn the money in any case.

'Hindsight wonderful'

The details have emerged as part of a legal report to the council cabinet.

Councillor Kieran Clarke, cabinet member for finance, performance and governance, said: "Hindsight is a wonderful thing.

"This council is generally risk-averse, but they were good rates of interest and I don't know if the e-mail would have made much difference to our actions.

The council's audit commission stated that "the e-mail alert did not suggest the imminent collapse of the Icelandic banks, but was an update that their creditworthiness had reduced. It was issued as advice rather than as an alert to withdraw money immediately".

Regardless of the e-mail, it acknowledged there was no guarantee that any money could have been recovered. It said procedures for receiving financial e-mails had been tightened so that more staff received credit updates and there were also more rules and procedures in place to protect investments.

It said the council's willingness to disclose the mistake was a reassuring sign the council had made improvements in its financial accountability and openness.

No disciplinary action was taken against the employee.

In 2008 no single political party had control of the council, but the largest group was the Labour Party group with 14 seats.