By Angela Dorizas
The New South Wales Department of Local Government said it would take a closer look at Maitland City Council’s investment portfolio and reporting in response to council’s differing accounts of the number of collateralised debt obligations (CDOs) it holds.
Maitland Council issued a press release, dated 3 April 2008, claiming to have had no exposure to CDOs just one day after the release of the Cole Inquiry into local government investments in CDOs and asset-backed securities.
But the council’s own statement of investments for the period ending March 31 contradicted this claim. It listed four CDOs, one credit linked note that included CDOs, and an asset-backed security classed by some financial analysts as a CDO. The report did not include the market value of these products and only one, Momentum CDO, was specifically listed as a CDO.
Deputy Director General of the NSW Department of Local Government, Ross Woodward, told Government News that the Cole Inquiry received a submission from Maitland City Council, but it listed only two CDOs.
“What they told us was that they were expecting exposure to two CDOs at that stage, with a total of $1 million exposure,” Mr Woodward said.
“Providing information to us should have simply been a matter of picking up reports that already go to the councils, so it should not have been anything additional to that.
“We are happy to have a closer look and see whether or not there are other things they haven’t notified us of.”
Mr Woodward said that if council had inaccurately reported its investments to the DLG it would raise alarm bells over council governance and reporting.
“We would be concerned about any council that reports certain things to us if they are inaccurate,” he said.
“Some of these are fairly complex issues and so some councils have come back to us and said they have now found that there might be some more than what they had notified to us. As long as they notify us and keep a regular dialogue with us that is okay.
“They should have also been reporting on these to the public. That is what we require as well.”
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