General manager of Oberon Council, Bruce Fitzpatrick, believes that the council's evidence is overwhelming in their case with 11 other councils who are seeking to sue the Local Government Financial Services over losses of $18.5 million in investments of council workers’ superannuation funds.
Mr Fitzpatrick said that Oberon Council has been talking with its legal team and are hoping they can recover the lost investments.
It was reported at the weekend that the group of 12 NSW councils, including Oberon Council, had bought $45 million worth of financial products called Rembrandts.
The Rembrandts had been allegedly sold for $18.5 million to the councils including Bathurst, Parkes and Orange in the Central West as well as country councils at Deniliquin, Cooma-Monaro, Eurobodalla, Narrandera, Moree Plains, Corowa and Sydney suburban Ryde council.
The Rembrandts had, according to the weekend report in the Sydney Morning Herald, returned the councils just seven cents in the dollar.
While the 12 councils have been reported to have brought actions, Local Government Financial Services was understood to be bringing crossclaims against the credit ratings agency Standard and Poors and the investment bank ABN AMRO that allegedly concocted the product Rembrandts.
According to the report the action against Standard and Poors would be unprecedented. Councils had relied on S and P’s triple-A rating and recommendations relied when buying the financial product.
Standard and Poors issued a press statement last Friday saying that Local Government Financial Services had been placed on “Credit Watch Negative”. It said the negative outlook was based on concerns over the claim by the 12 councils.
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