August 20 2014 Latest news:
Thursday, July 10, 2014
Islington Council has come under fire for having £85,000 invested in “legal loan sharks” a year after promising to take the cash out.
Last July, the Gazette revealed that Islington Council had sunk £84,785 into controversial payday loan companies despite publicly waging war on them.
The money – some of which may be taxpayers’ cash – was invested to raise funds for its pension pot, but red-faced council officials promised to sell up.
Now it has emerged the investments are still in place after one of the companies it has poured £8,000 into – Wonga – hit the headlines for sending out letters to struggling borrowers in the names of two non-existent law firms to frighten people into paying off their debts.
Caroline Russell, Islington’s Green Party councillor and sole opposition member to the ruling Labour group, said: “I’m really shocked that it has not been a priority for Labour to re-invest these funds in more ethical companies.
“These payday loan companies cause untold misery to residents struggling to make ends meet.
“People will be astonished to discover whose side Islington Labour are on, especially in this time of enforced austerity and severe benefit cuts. It is clearly not the side of those struggling to cope with payday loans.”
A spokesman for the union Unite, which campaigns against payday loan companies, said: “This shows how insidious Wonga have become in our everyday lives.
“We would hope that the pension fund would move swiftly to invest their money more ethically.”
Terry Stacy, the former Lib Dem councillor who highlighted the investment, said: “I can’t believe nothing has been done about the Wonga investment in all this time.
“How can the council preach against pay day loan companies on the one hand and have their pension pot tied up in it on the other?”
Cllr Richard Greening, chairman of the council’s pensions sub-committee, said: “The pension fund has a very small amount invested in Wonga via an independent fund manager. We would like to get rid of this investment and have looked into removing it.
“However, currently getting rid of the investment would bring large costs which cannot be justified. It would actually be unlawful because of the expense to taxpayers.
“We will continue to monitor the situation.”
A year before news of the council’s payday loan scandal, which has also seen it invest in Zestcash, Kestrel Holdings and Brighthouse, broke the town hall found itself in trouble over its pension investments.
In July 2012 it emerged it poured £11million into tobacco firms while it was denouncing the evils of smoking. The council’s pension fund contains a total of £918 million.