HEREFORDSHIRE Council has said that its former chief finance officer “did not require authorisation” to confirm the council’s six figure funding commitment to Hereford Futures Ltd (HFL) as the company was wound up.

In a statement to the Hereford Times, the council says the letter to the directors of HFL was “merely informative” in outlining the level of funding available in existing approved budgets and agreements  -including anticipated rental income from properties acquired with Advantage West Midland monies.

As such, the letter did not require authorisation, the council says.

Outlined in the letter, that commitment was worth £485,950 across the financial years of 2013/14 and 2014/15 with the availability of further funding up to £209,050 conditional on council approval.

Minutes for a meeting of the council’s overview and scrutiny committee in November last year confirm that HFL chief executive Jonathan Bretherton told council officers  that he did not expect the total liabilities of the company to be more than £525k.

Herefordshire Council is already in talks with the Homes and Communities Agency (HCA) over the extent to which the council can take on the liabilities of HFL, set up as an arm’s length company to drive redevelopment in the city.

The report of the HFL directors’ for the year ending March 31 2013 states that the company has net liabilities as at that date.

In April  last year the company was told it would cease its operations, which would be transferred to Herefordshire Council, and ultimately would be wound up.

However, HFL did receive confirmation from  the council that “sufficient funding” would be made available to the company to enable it to fulfil its  obligations and to pay liabilities as they fell due.

The Hereford Times has reported that on May 30 last year the council’s then Chief finance officer (CFO)  wrote to the  directors of HFL to confirm the council’s funding commitment to the company.

In this letter it was recorded that the council had requested HFL to continue to trade in  accordance with agreed business plan priorities and then wind down.

In consideration of  HFL directors agreeing to this request, it was also confirmed that the council would  provide funding of a maximum value of £695k in a combination of revenue and capital - by way of non-repayable  grant - during the financial years 2013-14 and 2014-15.

The letter went on to record  that HFL was intending to operate in a financial envelope of £485,950 and that  £695,000 was to be the maximum sum that would be made available to HFL to enable the directors to “discharge in full the liabilities of the company as they fall due” and repay all remaining liabilities together with costs and expenses associated  with the  wind down.

Papers subsequently put the extent of council funding at £355,322 in 2013-14; and £130,628 in 2014-15  and rental income contributions estimated at £95,600 for 2013-14: a total of £581,550.

The difference between this and the maximum sum of £695k referred to in the then CFO’s letter is £113,450 that the council says relates to an “available funding resource” that  can be accessed following agreement to a “funded business case” submission.

Other than that than the May 2013 letter from the then CFO, no assurances or commitments have been given by council officers.

As such, the issue will be reported to the council’s cabinet for a decision in the coming months.

The council has already conceded that it is  “probably reasonable to infer” from the directors’ report for 2013 that, at the date the report was approved by the HFL Board,  the directors considered the council’s financial commitments in the May 2013 letter to be sufficient to cover the company’s then known liabilities.

Previously, the Hereford Times has also reported the council as paying out nearly £3m in funding and support for HFL over the past 11 years and funded a five figure pension contribution to its chief executive.