Is it legal for a town council to be holding money from a dissolved limited company?

Question

My council to which I have recently been elected is showing to be holding money from a limited company which was dissolved in Sept 2009. When the clerk was asked about this she muttered something about 'so they didn't get into trouble with Companies House'. (she is being quite evasive and not very open about it). We have since discovered that the clerk and 2 councillors who were not re-elected were directors of this company. This company appears to have received grant funding for projects in the local area. I have not managed to look back yet to see when this money appeared in the council accounts, but the same sum was being listed under the heading 'regeneration' right up until the final summary at year end when it became listed under a heading of 'the name of the company's fund'. Am I right to be feeling a bit concerned about all this? Where can I go for advice?

Answer 1

Yes you are right to be concerned, this could be quite serious.

You could start off by contacting the senior legal officer in your principal authority (usually the district council) who has a key responsibility for standards and will also have extensive experience of legal issues in local government.  I would also find out who is your council's auditor and pass the information you have to the auditor, and ask them if they think an immediate investigation is appropriate.

These people may make further suggestions for action or other people to contact, but they are a good starting point.