Letter from MPA Vice Chair to MPA Chief Executive regarding KPMG review of Icelandic Investments

2 March 2009

Ms Catherine Crawford
Chief Executive
Metropolitan Police Authority
10 Dean Farrar Street
LONDON SW1 H0NY

Dear Catherine,

KPMG review of Icelandic Investments

The report on Icelandic Investments commissioned by the Authority was discussed at Friday morning's (27 February) BMG meeting.

I do not want to pre-empt discussions by members of the Finance and Resources Committee but I am sufficiently concerned to write and ask that with immediate effect you
arrange for:

• Effective dialogue on treasury management takes place between the Director of Resources and the Treasurer.
• The limit on overseas investments is reduced significantly.
• During the current climate we adopt a more risk-averse approach to investments.
• A wide range of market indicators and intelligence, including credit default swap prices, are monitored proactively.
• Daily management of the investment portolio is reported to MPS senior management and the Treasurer, including 100% coverage of cash balances.
• Changes to the lendlist are approved at Director level and notified immediately to the Treasurer.

I am copying this note to the Commissioner to seek an assurance that appropriate measures are put in place within the Metropolitan Police Service. Copies are also going to Members of the Finance and Resource Committee in advance of the Committee meeting on the 5 March. While I recognise that the Committee will be considering the full range of recommendations in the KPMG report we must take appropriate management action on these key issues without delay.

Yours sincerely

Kit Malthouse
Vice-Chairman of the Metropolitan Police Authority

Cc Commissioner, MPA Treasurer and Members of the MPA Finance and Resources Committee.

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