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Swansea Council explains 'unlawful' £20million pension fund transaction

By South Wales Evening Post  |  Posted: February 05, 2013

Rob Stewart, cabinet member for finance

Comments (8)

A £20 million pension fund transaction by Swansea Council has been deemed unlawful by auditors.

The movement of cash from the account was raised in auditors PricewaterhouseCoopers's report last year.

It was done so because the authority was switching banks to HSBC and all accounts had to be in balance.

The cash was fully paid back in August 2012 and did not leave the authority.

However, in its report PricewaterhouseCoopers auditors said they were "concerned that this transaction may have been in breach of regulations and the appointed auditor instructed solicitors to advice how the regulations applying to the local government pension schemes impact on the transaction".

It added: "The solicitors have advised that the provisions of £20 million by the fund to authority is unlawful and must be so recorded in the pension fund accounts."

The matter was discussed at a meeting of Swansea Council's cabinet. At that meeting members of the public, Nortridge Perrott and Ray Welsby called the movement to a new bank and the transaction into question.

Answering Mr Perrott's question on why the council moved to HSBC, cabinet member for finance Rob Stewart said: "The council's bank contract is subject to a competitive tendering exercise. The contract award was made under delegated powers and the best case was taken."

He said the council had not changed accounts since 1996.

Speaking about the movement of the £20million, he added there had been no malpractice.

"It was not something that was out of the norm for officers to move money around," he said.

"It was because we were moving banks and all accounts had to be in credit.

"I do not believe there was anything untoward in that."

Mr Welsby asked members whether the pension stakeholders had been informed of the movement.

Mike Trubey, section 151 officer (statutory chief finance officer), said: "In light of the audit it has been challenged and we've changed the system to make sure it doesn't happen again.

"The trustees did not know, someone did this as part of treasury management. They are aware of what's happened."

Council leader David Phillips also emphasised that the transaction had been unlawful, which meant it had been done without authority.

"That's not the same as illegal," he added.

The £203,000 lost in interest while the cash was in another account has been repaid.

Mr Phillips said the council had take the decision to repay the interest on "moral" grounds.

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  • dixiedog60  |  February 05 2013, 8:38PM

    Lets get the facts right shall we. THis happened during the 2011/12 financial year which was under the control of Chris Holley and the Lib Dems NOT Labour and I repeat NOT the Labour party. Someone should ask the previous Lib Dem administration why £20 million was transfered into a NEW account just weeks before the local 2012 election? If we want answers our questions should be directed at Councillor Chris Holley and his cronies not the likes of Rob Stewart who is just trying to clean up the mess left by the incompetent Lib Dems.

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  • Carnabwth  |  February 05 2013, 6:51PM

    These Auditors were involved in oversight of other shortcomings within the Authority.

  • GorsseinonJoe  |  February 05 2013, 6:41PM

    Who will be held account for the loss of the £203,000 interest? Probably no-one.....again. These are incompetents in charge of incompetents and Labour voters ought to think long and hard when it comes to elections, where we will no doubt be told how successful they have been and how they look after the public purse.

    |   1
  • Julesbreadbox  |  February 05 2013, 11:37AM

    Nothing like a good explanation.... HSBC......got it......

    |   5
  • morlaisboy  |  February 05 2013, 11:36AM

    Your report does not clarify who took the decision !

    |   12
  • morlaisboy  |  February 05 2013, 11:35AM

    Your report does not clarify who made the decision !

    |   9
  • siarad2  |  February 05 2013, 11:19AM

    From where did the £203k come, loss of interest is a LOSS, did the bank make it up or councillors chip in or council tax payers suffer the loss.

    |   15
  • weslangdon  |  February 05 2013, 9:58AM

    these auditors were involved in the sequestration of the assets of the NUM during the miners strike...for that reason alone they ought not to be employed by a Labour run Authority http://tinyurl.com/a2e2dt5

    |   -6