Further Financial Fiasco at Warrington Borough Council: £10m of property investment now in doubt.
It has finally been revealed that Warrington Borough Council’s £10m investment in 2021 for shares in a Birmingham property company now has an estimated value of just £1.3m. This news follows challenges from the WBC Conservative Councillors Group for the Labour-led Council to come clean with residents regarding the extent of the failure of their investment in Mailbox REIT Plc.
The Conservative Councillors Group believes that this investment decision was unconstitutional, and that the truth about the financial difficulties was hidden from Councillors. The extent of the problem only came to light after a press article on 10 December 2023 in inews, and the Tories have now made an official complaint.
During 2023, WBC’s Audit and Corporate Governance Committee was not made aware of the collapse of the property value of Mailbox, the collapse of the net asset value per share, the cessation of dividend payments or the breach of the company’s banking covenants. In the WBC 2023/24 Mid Year Treasury Review dated 14 November 2023, Mailbox was reported at full value of £10m and the report said, “The investment has maintained its value in the period, with a high degree of occupancy, rent collection, and long lease length.”
Councillor Ken Critchley (Cons., Appleton) said: “WBC’s Mailbox investment raises many difficult questions for WBC as it’s the latest financial disaster that is likely to lose Warrington residents’ money.”
“This is another example of embarrassingly bad investment decisions by WBC. What is worse is the way this investment was reported to the Audit and Corporate Governance Committee throughout 2023. A paper from the Conservative Group to the Council shows the extent of the investment misreporting and how the investment decision is, in our view, not constitutional.”
At WBC’s Audit and Corporate Governance Meeting held on 8 February 2024, Councillor Critchley tried to persuade the Chair of the meeting to allow questioning of officers over the reports they had presented to the Committee throughout 2023. However, Labour Councillors sought to avoid a discussion on the subject and the meeting then descended into chaos when a senior Council Officer decided to walk out. The conduct of this meeting has subsequently been the subject of complaints both to and from the Council.
Commenting on the meeting, Councillor Critchley said: “£10m of public money now has an estimated value of £1.3m. Perhaps this explains why the Council did not want its latest fiasco revealed. Without the press picking this matter up in late 2023 we may still be none the wiser. This is a shocking situation. Warrington deserves better than the Labour Administration who have allowed this latest financial fiasco."
