Police authorities that invested in Icelandic banks that collapsed could get almost all their money back, it has been revealed this week.
Administrators for Heritable Bank and the UK arm of Landsbanki, Ernst and Young, have released a report which suggests investors could receive up to 80 per cent of invested funds back.
Around £95.72 million of police authority money is believed to have been deposited in the Icelandic banks which collapsed in September 2008.
Fifteen authorities have money invested in the Icelandic banks; the Metropolitan Police Authority has the highest investment at £30 million.
Sussex Police Authority, which has £6.8 million invested in Heritable bank, welcomed the news that it could receive its first repayment as early as July or August.
Richard Hornby, treasurer to the authority, said: “It is welcome news. We will now be planning our forward programme for 2010/2011 on the basis that we will secure around £4.8 million back.
“I remain confident that we will see more of our original investment of £6.8 million being returned. The administrators may have spoken about creditors only securing 70-80 per cent of their investment, but they have to err on the side of caution.
“Heritable is still trading and making money, so the prospects of a better return are in place.”
At the time of the collapse, chair of the Association of Police Authorities (APA) Bob Jones said the investments in Icelandic Banks were made in good faith and followed treasury and audit commission rules.
Mr Hornby stressed that the loss of the money was always going to be ‘temporary’.
He added: “It has had no impact at all on services or council tax in the current year, and Sussex Police Authority was just one of many local authorities, together with other public bodies and charities, to have invested in Heritable UK.
“Before placing our investment, we followed all government guidelines and took proper professional advice. 
“The failure of a British-regulated bank is something that would have been unthinkable 12 months ago. Even the local government watchdog, the Audit Commission, had money invested with Heritable. 
“It is also important to stress that the Audit Commission carried out its own independent review and concluded that we had not been negligent.”