SOLIHULL council is facing questions over its mysterious investments overseas amid the Paradise Papers scandal, we can reveal.
After Solihull Observer enquiries, it appears councillors and senior officers do not know the precise whereabouts of the borough taxpayers’ money it invests abroad, handled by a third party.
Opposition councillors also accused leaders of ignoring previous calls for the council to introduce an ‘ethical investment policy’ – that would prevent any potential use of unethical businesses or tax havens.
As with other councils, reserves of Solihull taxpayers’ money set aside for future projects are placed in banks or other companies to get the best return.
Councils can also borrow from offshore funds abroad to pay for major developments.
Some of Solihull council’s reserves are located in investment vehicles internationally, such as “pooled funds” – which involve combining the council’s money with that of other organisations to maximise returns.
Conservative councillor Robert Hulland, Solihull council’s cabinet member for resources, said in a statement to us: “Solihull council has no direct investments or interests in foreign markets.
“At 31st October 2017, £2.6 million of our total investment portfolio of £30.75 million was invested on a short-term basis in the highest rated (AAA rating) Money Market Funds which are pooled funds invested in global finance markets.
“The council receives monthly transparency reports to show how and where these pooled funds are invested. The majority of the funds are invested in Japan, France and the Netherlands.
“In terms of borrowing for capital projects, £15 million of the council’s overall £239 million borrowing portfolio is from European-based institutions, £10 million from Germany and £5 million from Belgium.
“All borrowing and investment decisions are made in accordance with an approved Treasury Management and Investment Strategy.”
We asked Coun Hulland and the council to be more transparent with the public. We called for information on the precise locations and institutions used for these investments, and asked to see the so-called ‘transparency reports’.
So far, we have received only one, from this month. Other countries listed are Luxembourg, Switzerland, Finland, Canada, Australia, Sweden, Denmark, United States, and Norway.
But it provides no further information whatever on the precise nature of the investments or locations.
We asked if the so-called ‘transparency reports’ were transparent enough to be in the public domain for council taxpayers to inspect. We await a response.
Green party councillor Max McLoughlin told us: “We’ve been pushing for the council to improve on the issue of ethical investment for some time, but have been pushed back by the controlling group.”
He said in September 2014, an amendment to the council’s strategy calling for an ‘ethical investment policy’ was tabled by Green councillor Karl Macnaughton, but it was voted down.
He added in March last year, the council’s opposition leader James Burn (Green) tabled a motion to “tighten up the council’s policy on tax avoidance, so that companies Solihull procures services from would need to be fully tax compliant”.
Coun McLoughlin added: “The Audit Committee chose not to implement the motion as it read, due to the potential for the council to be ‘exposed to an increased risk of challenge to the procurement process if bidders were to be excluded on tax evasion grounds’.”