Sir Robin Wales is about to flush £40 million of council taxpayers’ money down the toilet.

Detail hidden in the draft accounts due to be signed off by cabinet tonight shows that the ‘loan’ made to help transform the 2012 Olympic stadium into West Ham United’s new ground is being written off.

Newham Council ‘invested’ £40m via a special subsidiary company called Newham Legacy Investments Ltd.

At the time, Mayor of Newham, Sir Robin Wales stated:

“Our investment of £40 million secures that legacy by transforming the Olympic Stadium into a world class attraction […]. This will provide us with a share of the profits generated over the long-term and a range of community benefits for Newham residents.”

After just one season of operation as a football stadium the council is now ‘writing off’ that £40m investment. A line in the Draft Statement of Accounts 2016/17 states:

“Impairment totalling £44.4m of a Long Term Debtor in one of the Council’s group undertaking, Newham Legacy Investments Ltd” (page 12, item 7)

and

“The company’s 2016/17 financial results disclosed a loss of £2.5m (2015/16: loss of £41.6m), and net liabilities of £44.4m (£41.9m of net liabilities as at 31 March 2016).” (page 88, item 39)

Newham Legacy Investments Ltd has had a number of directors over the last five years including senior council officer Zoe Power (Head of Projects and Programmes, Newham) and Cllr Lester Hudson (deputy Mayor, Cabinet member for Finances and Chair of Audit board). Given that the audit board should scrutinise decisions made by cabinet, council and council-owned subsidiaries this combination of roles was a massive conflict of interests.

While Newham handed over £40m to convert the stadium, West Ham United themselves only contributed £15m, despite being owned by two multi-millionaires and the Premier League being the richest in the world.

The £40m being written off is double the amount of ‘savings and efficiencies’ being made this year. Residents were promised the investment would provide Newham with a share of the profits generated over the long term. It turned out be a gift to Messrs Sullivan and Gold. The money, borrowed by the council from the Treasury, will now have to be re-paid by local taxpayers.

This blog has regularly cast doubts on whether the other commitments including local jobs and tickets for residents have been delivered.

This is not Newham’s first Olympic investment to back fire. In 2012 it also had to write off more than £3m invested into London Pleasure Gardens. With additional liabilities added on, taxpayers were left close to £5m out-of-pocket.

All-in-all, Sir Robin’s track record on finance (under the ‘scrutiny’ of the double-jobbing Cllr Hudson) is not impressive.

Which makes this week’s news that Newham council has bought a multi-let office block in Redhill, Surrey for £25m all the more worrying.