IT SOUNDS like something out of a Hollywood movie – a Government official signs off millions of pounds of public money and loses it.

However the way in which £4 million of Restormel Borough Council's money was invested into the failing Icelandic bank Landsbanki is all too real. A report into how it invested in Landsbanki has shown that there were serious breaches of council guidelines.

It has been revealed that the council made major errors in making the investment not once, but four times.

● The investment broke the council's treasury management (TM) policy by placing investments with single institutions exceeding the approved limit;

● The investment was made just 90 minutes before Landsbanki collapsed;

● The officer who authorised the investment was not familiar with the TM policy;

● That same officer was not an authorised signatory.

Details of the mistakes made by the council when making the investment were revealed in a report by the Audit Commission on the council's use of resources.

The council already had £1 million invested in Landsbanki when a decision was made in October to invest another £3m in the Icelandic bank.

However, the council's own treasury rules state that no more than £2m should be invested in a single institution. It has also been revealed that the decision to invest in Landsbanki was made on the advice of Sector Treasury Services – a firm which was being quizzed by MPs this week for its role in advising councils all over the country to invest in Icelandic financial institutions which subsequently collapsed.

In a statement, the council said the report's reference to "technical breaches" of the TM policy had resulted in scores being downgraded in certain areas.