Barnet Council not good at thinking of risks - Saracens

Here is the risk register that was cobbled together by Barnet Council to offer some crumbs of comfort for the stupid 30 year loan of £22.9m to Saracens.

 

It seems that no council employee (or 'Officer' as they are so grandly titled) considered the possibility of relegation and the effect on the club's finances or even on crowd size such that the enlarged stand may not be needed. This risk affects the ability to repay.

Mr Mustard isn't being wise after the event. He never thought it was a good idea to lend to Saracens especially when a multi-millionaire was their backer and could easily afford a new stand.

The Council did obtain a report from external accountants about making this loan. The external accountants should have obtained fully detailed Annual Accounts from Saracens and management accounts for recent months and given the rumours about the salary cap breach they should have gone though them with a fine tooth comb. They probably weren't being pushed to be overly diligent, it was just a box ticking exercise, a fop for the public, that, or the breaches were hidden out of sight, which makes Saracens not a fit and proper company to be offered credit.

There must be an awful lot of back covering going on in the Barnet Council offices at Colindale at the moment. There is a meeting on Wednesday of the Financial Performance and Contracts Committee but that isn't going to decide anything, it is merely going to 'note' the report that the Deputy Chief Executive, Cath Shaw (by coincidence she is a bit of a rugby fan) is presenting.

The council are still bending over backwards for Saracens, despite the well publicised failings with the salary cap. The two fines, points deductions and agreed relegation are all very good reasons to cancel the loan and demand repayment of the sums advanced so far. There are no extra assets from which the £3.2m could be recovered and Saracens are several million down in fines, further eroding the available assets.

The council know they can walk away:

The council admit and recognise there are 'significant financial implications' but still want to leave the door open for further lending. A bonkers stupid decision.

There will be a definition in the contract, which Mr Mustard has not yet seen, but which a member of the public has asked for via the What Do They Know website, of the term 'Material Adverse Effect' but one would hope that the council's lawyers have written it to cover such a financial morass as the one which Saracens have got themselves into by their own reckless actions. Councillors on this committee should be given the definition and should really of their own volition ask to see a copy of the contract which they are absolutely entitled to see. Decisions should not be taken on a contract without seeing a copy of the contract so you know what you are deciding on.

If the council don't hold the view that the current state of events is a materially adverse one then that would be wilful blindness.

The sum in question is petty cash to the multi-millionaire behind the club. Just ask him nicely for our money back and let's put it to better use.

Yours frugally

Mr Mustard