A council under scrutiny for a series of disastrous investments altered its rules to allow it to invest in the “junk bonds” fund of a Monaco-based financier.
Warrington Borough Council removed a restriction against investing in high-risk bonds to make the deal happen. The council has been accused for failing to consult properly with elected members prior to doing so.
According to a former Conservative Councillor, the indebted Labour authority did not obtain the “necessary permission” to invest £10 million into the Altana Corporate Bond Fund in 2018. The fund is a part of Altana Wealth – a fund manager established by Australian investor Lee Robinson in Monaco.
Warrington in Cheshire is a town with 175,000 residents. It has invested over £120 million into a series controversial deals connected to Robinson. These include funds managed by his firm, investments in an underperforming commercial building in Birmingham, and a start-up banking company.
Altana’s investments of £47 million, including the bond funds, have proven profitable.
Warrington Council is just one of the many councils who have invested in unusual investments to compensate for less funding from central government. It is one of Britain’s most heavily-indebted local authorities. The auditor of the council has called its borrowings of almost £2 billion “unaffordable, prudent, or sustainable”. was appointed to investigate whether Warrington was meeting a legal requirement of securing “best value” for its investments. The audited accounts of Warrington Borough Council are many years behind schedule.
Nigel Balding – a former Tory leader – claimed Warrington “has departed from prudent financial management and has been sucked in to a series investment gambles that have nothing to do being a Council”.
The Council’s Treasury Management Strategy previously prohibited investment in “junk debt” or non-investment Grade Debt.
Warrington published a “post-investment report” in January that revealed the financial officer, or Section 151 officer, had “delegated” powers to approve the Altana transaction by “amending” its strategy.
Balding wrote a report about the deal just before he lost out on his seat at this month’s elections. He claimed the council issued “misleading” reports about the investment, the valuation and the returns. The council denied this, saying that the investment was made in accordance with protocols “agreed upon by members”. Warrington claimed to have done due diligence on the fund prior to investing, and some members of the audit and corporate governance panel were consulted. The council said that all councillors were informed of the strategy change that enabled the deal.
Warrington in Cheshire is a town with 175,000 residents. It has invested over £120 million into a series controversial deals
Balding stated: “All councillors received the information about the new strategy only after an investment had been made.” It is not the case that being informed of a strategy change after it is implemented means you have had an opportunity to discuss the changes and reach an agreement.
He said that decisions about investments exceeding £250,000 were usually referred to council’s cabinet. This allows councillors the opportunity to request that decisions be scrutinized. Balding’s report states that the Altana decision exceeded by 40 times what is required for a cabinet-level decision.
He claimed that there was a “wide gap” between the actions of the council and the spirit or letter of the public sector investment regulations. The council denied that.
This is just the latest chapter of Warrington’s dealings in relation to Altana, and entities linked to Robinson, 54, an ex-derivatives trader.
It was reported that , the stake had lost most of its value. Robinson has served as a director at the bank’s holding firm, Redwood Financial Partners since 2015. The council said that Robinson was introduced after the Redwood Investment.
Robinson helped broker an investment of £10 million by Warrington into Mailbox, which is a commercial venture in Birmingham’s centre owned by M7, the European property group. This stake is worth £1.3million.
The Tory Councillors complained about the lack of transparency in deals involving Robinson.
Warrington said that Mailbox had “record levels” of rent and occupancy and that M7’s other investments have performed well. It said that its Altana investments had performed well and were a part of its “diversified strategy”.
The council made other controversial investments that were not related to Robinson. These include a £211-million purchase of a commercial park, which auditors called “highly abnormal”; a £202-million loan to entities controlled Matt Moulding (founder of THG), the retail group; and a £18-million investment in Together Energy a supplier of energy that stopped trading in 2022.
Altana Wealth stated that the bond fund was backed by “a wide range of fixed income securities of corporates and sovereigns as well as public institutions, both high yield and investment grade” and its diversification approach reduced risk.
The company disputed a Bloomberg report that said the fund underperformed its peers, and pointed out that M7 investments were not connected to Altana.
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