Agenda item - Cash Collection - Company Administration Update

Report of the Executive Director, Finance & Resources (copy attached).

1)            That the Audit & Standards Committee note the report.

19.1      The Committee considered a report of the Executive Director, Finance & Resources that provided an update following the publication of the Joint Administrators latest progress report regarding the company administration process for Coin Co. International (CCI).

19.2      Councillor Druitt stated that he did believe that the issue was one of fraudulent activity as it appeared clear that the money due to the council was used for a purpose that it should not have been used for. Councillor Druitt asked if the council had reported any CCI director for wrongdoing and if there were options to take private action to recover its loss. Furthermore, Councillor Druitt asked who the secure creditors were.

19.3      The Assistant Director- Finance replied that whilst the CCI banking arrangements and performance were not satisfactory, the council had no evidence that they were acting fraudulently and was able to reconcile all collections and payments to and from CCI. The Assistant Director clarified that there had been an investigation by the National Crime Agency (NCA) in relation to suspected criminal activity but that no further action was to be taken as there was no evidence to suggest fraudulent behaviour. The Assistant Director stated that there was no basis for the council to report any CCI staff or directors and there had been constant communication between the council and CCI, and site visits by officers following termination of the contract in August 2014. The Assistant Director supplemented that the company administration process currently underway was a highly legal process directed by the courts and unless the council had specific evidence of fraudulent activity then it would not be possible to undertake legal action. The Assistant Director explained that a secure creditor would be a person or organisation with a secured debt such as a mortgage and where realisable assets were recovered by the Joint Administrators; secured creditors losses would always be met first.

19.4      Councillor Druitt queried the response as he understood CCI had continued trading as insolvent which was a criminal offence.

19.5      The Executive Lead Officer, Strategy, Governance & Law stated that the civil powers available to the council would also be available to the Joint Administrators and provided assurance that the council had taken every action it possibly could to recover the money owed. The Insolvency Agency, a Department for Business, Innovation & Skills sponsored executive agency had made enquiries into the actions of CCI that would perhaps relate to the offence of trading as insolvent.

19.6      Councillor Robins stated that it was a credit to the council that the issue had been reported and dealt with in public that would help the image of transparency of the council.

19.7      Councillor Cobb enquired as to the amounts owed to other companies.

19.8      The Assistant Director, Finance stated that that information about all of CCI’s creditors was publically available and detailed hundreds of creditors worldwide to a total of approximately £10m.

19.9      Diane Bushell stated that she understood that the Canadian authorities had taken insolvency action against CCI in 2010 and asked if the council was aware of the action and what monitoring arrangements were in place or could be put into place so that it was aware of such actions in the future.

19.10   The Executive Director, Finance & Resources replied that he did not have information in relation to that specific issue to hand and would investigate the matter and report back to the committee after the meeting. The Executive Director, Finance & Resources stated that companies were monitored by credit rating agencies and he hoped those agencies would have taken any insolvency action into account.

19.11   RESOLVED- That the Audit & Standards Committee note the report.