Investment reports maintain transparency

In response to a letter published in the Peninsula News on Monday, March 7, (Answers still needed on CDO scandal), Gosford City Council would like to clarify and correct some of the points made.

Gosford City Council commenced its Collateralised Debt Obligation (CDO) investments in 2002, at the time that the author of the letter Answers still needed on CDO scandal, Debra Wales was a councillor with Gosford City Council and should have been aware of these investments.

These investments continued until July 2007.

At the time these investments were made, they were rated AA or above - which was comparable to or better than the four big Australian banks.

There were numerous other organisations across NSW and Australia that invested in these securities - many other Councils, universities, banks, superannuation funds, charities and not-for-profit organisations.

The net return on investments for this investment portfolio since 2002 is $53.7 million.

This represents a solid average return of 5.4 per cent over this period.

Of the CDO's Gosford City Council invested in, only one was a residential mortgage backed security.

This was the Federation CDO, on which Council received a full return on its investment.

Comments made by Councillor Holstein stating "there has been no loss to Council" (as a result of these investments) were factually correct at the time these comments were made in April 2009.

Gosford City Council did not realise any losses on its investments until September 2009.

Gosford City Council's investments have always been made in accordance with Council's Investment Policy, Ministerial Investment Orders, Division of Local Government Circulars, and legislative and regulatory requirements.

The daily operational management of investments is performed by a key group of suitably-trained finance staff reporting to the finance manager, who reports to the director corporate services, Council's designated responsible accounting officer.

Independent financial advisors monitor the performance of Council's investment portfolio and provide advice to council officers on future investment strategies.

Information is provided to councillors via monthly investment reports to update councillors on the current status of Council's investment portfolio, and investment reports are published on Council's website every month to maintain transparency and integrity in all of Council's investment decisions.

I trust this clarifies the information printed in the Peninsula News on March 7.

Email, 16 Mar 2011 Peter Wilson, Gosford Council