Inquiry call over Westminster leader's hedge fund

By Ed Davey
BBC News, London

Councillor Barrow insists he has broken no rules

Politicians have demanded an inquiry into the leader of Westminster Council after BBC London discovered a company he ran went bust, owing thousands of pounds in unpaid business rates.

Councillor Colin Barrow was shareholder and director of Eiger Capital, an investment firm he helped set up that went bust in 2008.

A BBC London investigation has now revealed the fund owed almost £20,000 in unpaid business rates to Westminster Council at the time.

Mr Barrow, leader of Westminster Council, has conceded that the council "won't get very much" of the money back.

The Conservative politician said he currently has about £350,000 personally invested in Alpha Strategic, a hedge fund of which he is chairman and Kit Malthouse, Deputy Mayor of London and Chairman of the Metropolitan Police Authority, is finance director.

If there are doubts about the business relationship the leader has with his own council then an immediate inquiry is clearly required Liberal Democrat spokesman

Paul Dimoldenberg, leader of the Labour group in Westminster, said: "For the leader of the council to owe such a huge amount in unpaid rates to the council as a result of his company's collapse is a very worrying situation.

"And particularly as the council is cutting jobs and services as a result of the financial crisis the council is in.

"The leader of the council has a number of other companies and he has a responsibility to make good what is owed to the council so taxpayers and residents don't lose out."

A Westminster Liberal Democrat spokesman said: "If there are doubts about the business relationship the leader has with his own council then an immediate inquiry is clearly required."

Since the company's collapse, Freedom of Information requests to the council to determine how much is owed were ruled by officers "not to be in the public interest".

Councillor Barrow is chairman of Alpha Strategic and has £350,000 in the fund

But BBC London has now seen a copy of Eiger Capital's insolvency document, showing he invested £430,000 in the fund and owned both ordinary and preference shares.

The document states that Westminster Council was owed £68,145 at the time of the insolvency but a council spokeswoman now insists that the true figure owed was £19,186.

The document also shows Eiger owed money to other creditors, including £225,292 to HM Revenue and Customs.

Mr Barrow said the two firms - Eiger Capital and Alpha Strategic - were "quite separate businesses" and it would be wrong to repay the rates debt from his other company's funds.

He said: "It would be completely wrong. That's how the financial system works.

"Just because I am in public life I don't see it's necessary to guarantee the debts of every organisation I am involved with."

Mr Barrow admitted that he could withdraw his investment from Alpha Strategic by selling his shares on the stock market.

But he said: "I lost ten times as much as Westminster [from the Eiger collapse] and I have not profited.

"And I have not caused this situation either. I was never a guiding force.

"I don't have anything to hide here."