BRUSH WITH THE LAW: A court has found in favour of councils that lost investment money during the global financial crisis.
ORANGE City Council could recover more than $1.4 million in investments lost during the global financial crisis, following a world-first victory against an international credit rating agency.
The Federal Court of Australia awarded 13 NSW councils more than $20.2 million in compensation and legal costs, on Friday, after it found Standard and Poor’s (S&Ps), ABN Amro Bank and Local Government Financial Services (LGFS) misled the councils about consolidated debt obligations nicknamed Rembrandt notes.
Orange was awarded $1,399,838 and Bathurst Regional Council will receive $932,956, but all the councils could recover more when interest is included.
General manager Garry Styles said it was a positive development, but the rating agencies could appeal the decision meaning it could be some time before ratepayers see the money returned to the council’s coffers.
“It’s a big deal that a handful of councils in NSW have taken on a huge international company,” he said.
“It vindicates what we said when these products collapsed.”
Justice Jayne Jagot found S&P’s AAA rating of the financial products was misleading and “grotesquely complicated” and the rating agency made negligent misrepresentations to the body advising the councils, LGFS.
Mr Styles said Orange’s lost investments were only a small part of the council’s overall investment portfolio.