£13.5m council loan to Northampton Town rushed through – auditors

• Inquiry finds this was partly due to pressure from Conservative council leader
• Loan for work on Sixfields stadium also under police investigation

A £13.5m loan to Northampton Town was made by the local council too quickly and with inadequate information and safeguards, partly because the then leader of the council, the Conservative David Mackintosh, now the local MP, was pressing for it, an internal inquiry has found.

Northamptonshire police are continuing to investigate what happened to the loan, made to finance improvements including a new east stand at Northampton’s Sixfields stadium that were never completed, while £10.25m remains owing to Northampton borough council. The police investigation includes inquiries into £36,000 in financial donations made to Mackintosh’s local Conservative association by Howard Grossman, whose company, 1st Land, was contracted to manage the Sixfields development, and people associated with him.

Despite a large proportion of the £13.5m being paid to Grossman’s company, the company building the new stand, Buckingham Group, downed tools in early 2015 having not been paid £1.9m they were owed, and put 1st Land into administration.

The damning internal inquiry, conducted by PricewaterhouseCoopers, the council auditor, found that Mackintosh, as the council leader, was stressing the importance of making the loan and that it be done “promptly”, after he made it a political priority for the club to be able to redevelop its ground. The club, then owned by David Cardoza, was in poor financial health, but this was not properly taken into account and insufficient checks were made before the decision was made to lend so much money, PwC concluded. Emails examined for the inquiry “raise concerns about the short timescales and pressure ... to conclude arrangements”, the auditor found.

“Email correspondence between the leader [Mackintosh] and officers highlight the importance of the transaction and the desire to conclude the transaction promptly,” the report states. “The political commitment in the Conservative manifesto along with the July 2013 cabinet decision [to approve the loan] was considered a commitment to provide loan financing, despite there being limited information available at this time. Detailed business cases, due diligence checks and professional legal advice were not obtained until after the cabinet approval was obtained.”

The full £13.5m was rapidly loaned in tranches to the football club between September 2013 and August 2014, but the report found the council did not compare the scale of money being drawn down with the slow and stalled construction at the ground. “The physical progress of the stadium development should have provided a warning sign that the development was not progressing at the rate expected or in line with the funds provided,” the report said.

The council said in a statement that it “apologised unreservedly for the failings identified in the report”. Jonathan Nunn, the current Conservative leader of the council, said measures had been put in place to improve procedures:“The council’s management of this project fell seriously short of the standards people have a right to expect from their council, and that is wholly unacceptable,” he said. “I accept that the council failed to manage this loan in a proper way and clear action must be taken to show that lessons have been learned.”

Grossman could not be reached for comment. In November, after the police were asked to widen their investigation to include the political donations to Mackintosh’s constituency office, he said via his solicitor that he welcomed it as he believed it would clear his name. Grossman confirmed he paid £6,195 to the Conservative party for tickets to a fundraising dinner with Mackintosh and did not consider this to be a conflict of interest. A further £30,000 was donated to the Northampton South constituency office by associates of Grossman. Those associates could not be reached for comment.

Mackintosh, elected as the MP for Northampton South in last year’s May general election, said in a statement: “The donations to the Conservative party are part of the ongoing police investigation and so we have nothing further to add.” The constituency office has previously said that the donations were properly declared.

Responding to the PwC report, Mackintosh said that when he became the council leader there had been “years of frustration and waiting for key projects in the town to progress”, and he blamed council officers for the failures to manage the loan to develop Sixfields.

“I’m pleased that the shortcomings have been identified so this type of situation cannot arise again and welcome the continued investigations into this to recover the money,” Mackintosh said.

Northamptonshire police said it is “conducting a wide ranging and independent investigation into the full circumstances of the [council] loan to Northampton Town”.