Commissioners have slammed Liverpool Council ’s “failure of governance” over a potential loan agreement with Everton FC over the funding of a new stadium.
The local authority has been ordered to conduct an investigation into how it incurred “significant expenditure” to investigate the possibility of a loan to Everton FC as the club sought funding options for its new ground over a three year period.
A cabinet report to be discussed behind closed doors next Friday has detailed the damning verdict of government appointed commissioners to how Liverpool Council acted “without any formal council approval and without any budget provision approval” from April 2016 to March 2019. Between that time, according to the report, the local authority engaged with Everton “to investigate assisting with the funding of a new stadium development project” but these discussions “were ultimately unsuccessful.”
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It is said that during this period Liverpool Council failed to manage costs, “some of which are now irrecoverable.” Now commissioners have lambasted the council for their mismanagement of the project.
The commissioner review within the cabinet report said: “The Council incurred significant expenditure to investigate the possibility of a loan to EFC without any formal council approval and without any budget provision approval. The council failed to adequately manage costs, some of which are now irrecoverable.
“The Council failed to secure a cost indemnity to protect its position on fees and has been in negotiation with EFC for a number of years to reach a settlement, again without any council approvals in place.” The commissioners added that this was a “failure of governance” and they “require a lesson learned” to be conducted and reported within three months to the council’s audit committee.
The report said that this “resolves one of a number of outstanding finance issues at the council and contributes towards the resolution of outstanding projects, working with the local government commissioners.” It added that both Liverpool Council and Everton FC were “keen to resolve this legacy issue” after several rounds of failed discussions.
In January 2018, the council asked Everton for a cost indemnity for due diligence costs, in case the parties were unable to agree on loan arrangements, which the club provisionally agreed to, subject to reasonableness of costs. The cabinet is recommended to agree that chief executive Tony Reeves agree the final settlement with the Premier League outfit.
Authority could also be given to Mel Creighton, deputy chief executive, to write off any debt that arises from the difference between the invoice raised by the council and the settlement reached. The report said that should the matter be left outstanding any longer, it risks “negatively affecting the relationship with Everton Football Club.”
It added that this proposal would bring an end to the saga via a “rational settlement in all the circumstances and allows the focus to return to the existing stadium development project, with its expected regeneration benefits. Both sides are now keen to draw this matter to a mutually satisfactory conclusion.”
