Northampton Town: 'Serious failings' in council's football club loan

By Matt Precey
BBC Look East

image copyrightGetty Images
image captionNorthampton Town's East Stand remains unfinished

A £10.25m council loan to a football club for use on a stadium redevelopment had "serious failings", a report found.

Northampton Borough Council loaned the money, which has since disappeared, to Northampton Town in 2013 and 2014 to rebuild a stand and develop land.

The Public Interest Report "calls into question the legality" of decision-making over the deal.

The council said it was "carefully considering" the KPMG report and would respond in full next month.

The report said the amount of time the council needed to provide the evidence requested "points to inadequate governance, poor risk and poor performance management".

It found "serious failings" in the council's "arrangements" over the loan and said it should have been possible to "foresee the risk of the council being exposed to financial loss or liability" and it "should have mitigated that risk accordingly".

A failure to do this "rendered the decisions... unlawful", the report said.

The report concluded the council had demonstrated poor decision-making "based on poor/wholly lacking reports leading to public money being lost".

Work on the stadium was not completed after contractors went unpaid.

A police investigation into what happened to the loan cash has been completed and the Crown Prosecution Service is considering what action to take.

image copyrightPA Media
image captionDavid Mackintosh was the leader of Northampton Borough Council at the time the loan was made

The report authors were told by officers and councillors there had been pressure, "mainly" from David Mackintosh, the then Conservative leader of the council, to complete the deal.

It found that he led the council's talks with the football club but "many of of these discussions were not minuted or attended by any other council representative".

image copyrightGetty Images
image captionWork on the East Stand began in 2014 but stalled when contractors walked out, claiming they had not been paid

It also highlighted how he agreed, after a meeting with the club, to increase the amount to be made available by the council from £10m to £12m.

The final loan taken out was £10.25m but the report stated there was "no clear evidence" to explain why the offer increased.

Mr Mackintosh went on to become the Conservative MP for Northampton South in 2015 but did not seek re-election in 2017.

He did not respond when approached for comment.

image captionFormer Chief Executive David Kennedy acted unlawfully according to the report

The report said David Kennedy, the council's chief executive at the time the loans were agreed and paid out, had "exceeded his authority".

When the council's cabinet gave him and the other officers clearance to proceed, it was subject to a number of conditions.

Some were not met, including ensuring there was "sufficient tangible security" offered by the club to secure the loan.

KPMG found the security was "neither sufficient nor tangible".

"Failure to meet the conditions for the exercise of delegated authority rendered the decisions taken by the officers further to their delegated powers unlawful," the report said.

Mr Kennedy, who resigned in 2017, refused to comment.

image captionGlenn Hammons now works for East Northamptonshire Council

Glenn Hammons, the council's former finance director, also known as a Section 151 Officer, "fell short, in KPMG's view, of his duty to protect the financial interests of the council - and its taxpayers/residents".

He made "inadequate" attempts to confirm claims of increased costs by the club, now in League One, when they asked to increase the loan.

Mr Hammons did not respond when approached for comment via his current employer.

It also found due diligence work on Northampton Town's business plan was only completed in 2014 after the cabinet had agreed to the loans and sums had been paid out.

The borough council said "The report contains a series of recommendations for where KPMG feels the council's processes at that time should have been more prudent and how they might be improved.

"Many of these recommendations have already been addressed as a result of work we undertook following a similar report published by our then internal auditor, PwC, in late 2016.

"Our current internal auditor, BDO, has since built on that work to ensure our policies and processes are as robust as possible.

"We are in the process of carefully considering the contents of the Public Interest Report and will present a full response at our council meeting on 22 February."

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