Liverpool City Council is set to lose hundreds of thousands of pounds it spent on due diligence fees in relation to the Bramley Moore project.
The council spent around £700,000 on fees after it agreed to help fund Everton FC's Bramley Moore stadium on the waterfront. Everton later sought alternative sources of funding and did not accept the proposed loan.
A report to cabinet made public on Thursday has revealed that local government commissioners have accused the council of a 'failure of governance' over the proposed loan. The ECHO now understands that Everton FC is prepared to pay around half of the outstanding amount.
READ MORE: Investigation ordered into proposed Everton FC stadium loan fees
This means the city is set to lose hundreds of thousands of pounds. Councillor Richard Kemp, leader of Liverpool's Liberal Democrats, said: "Now it would appear that we will only get some of that £700,000 back and no interest on the cost of that money in the four to five years that we incurred it."
The ECHO understands that Everton FC are happy to pay the fees which specifically relate to the Bramley Moore project. This equates to around half the outstanding £700,000. Cllr Kemp said that he thought that some of the bill related to a feasibility study into whether Bramley Moore could host events for the Commonwealth Games.
The city sponsored an unsuccessful bid to host the 2022 games. At the time it was hoped Bramley Moore and other stadia in the city could host events at the games.
A Commonwealth Games feasibility study at Bramley-Moore Dock focused on the phasing of construction that would allow the stadium to operate in multiple modes over time, depending on which sporting event was being held at the ground and what effect it would have on capacity.
Cllr Kemp said: "There were plans for the venue to be able to host the Commonwealth Games as Liverpool pursued its ill-fated bid. Other parts of the money seem to relate to internal reviews about the matter rather than the due diligence work needed by the council."
Cllr Kemp was also critical of the fact that the item would be discussed in private next Friday. He said: “It is appalling that this report is going into a private business session so that the people of Liverpool might never know how much was lost in this ill thought venture."
A cabinet report has revealed that commissioners have been highly critical of the council's handling of loan. The commissioners identified a 'failure of governance' and found that the council acted 'without any formal council approval and without any budget provision approval.'
Liverpool City Council spokesperson said: “This is a legacy issue that is being amicably resolved by both parties.
"Between 2016 to 2019, the council was in talks with Everton Football Club to discuss whether funding could be provided to support the club’s transformational new stadium development at Bramley-Moore Dock.
"A variety of funding options were considered and external financial and legal advice was required and sought.
"The discussions with Everton were ultimately unsuccessful as the club pursued alternative sources of funding.
"We are working with Everton on coming to an agreement in relation to some of the due diligence fees incurred subject to reasonableness of costs.
"Both sides have been keen to resolve the matter and a mutually-acceptable negotiated settlement is being finalised.
"As the report sets out, this matter will be subject to a lessons learned review at the Audit Committee where it will be scrutinised."
