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Corporate Governance within Local Government: the Allerdale case
Author(s) -
Boyett Inger,
Ward Martin
Publication year - 1999
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/1467-8683.00130
Subject(s) - corporate governance , receivership , borough , appeal , debt , business , local government , public sector , capital (architecture) , government (linguistics) , public administration , accounting , finance , economics , law , economy , political science , bankruptcy , archaeology , history , linguistics , philosophy
In 1996 the UK Court of Appeal decided that Allerdale Borough Council was guilty of a fundamental breach of their obligations to abide by central government restrictions on capital spending. This decision followed the collapse of Allerdale Development Company, wholly owned by the local council, which had been set up to develop a leisure pool and timeshare flats as an innovative method of gaining resources for a ‘cash‐strapped’ local authority. Whilst the debts arising from the company’s collapse were minor, the potential financial implications for lenders to local authorities estimated at 1bn were comparable with the corporate sector collapses of BCCI and Maxwell. Equally serious questions are raised about corporate governance and its link to entrepreneurial activity in the public sector.