Bosses at Powys County Council were today accused of acting “irresponsibly” after millions of pounds’ worth of taxpayers’ money was deposited into Icelandic banks.

The county council is one of a number of British councils which invested money in the banks, which collapsed in October last year. Powys had about £4 million invested in two Icelandic banks.

It is now losing interest totalling £250,000 per year.

The deposits, which are approximately six per cent of the authority’s cash investments, were in the Landsbanki and the Glitnir banks.

Several banks in Iceland were taken over by the country’s authorities when the nation’s financial system seized up, trapping about £800 million of UK local authority funds. But Welshpool Town Council said the county council could have done more to protect the money.

Councillor Phil Pritchard said: “If you would have asked me a few months ago whether or not Powys would be getting any of this money back I would have said it didn’t stand a chance.”

Reports released earlier this week said the administrators for one of the banks which collapsed, Heritable Bank, have indicated its creditors could receive about 80 per cent of their funds back – equating to a total repayment of about £300 million.

But the county council says it is too early to say what the announcement will mean for Powys because no exact details have been released yet.

Councillor Pritchard said: “It does not excuse the fact that the council invested £1 million in Landsbanki just a month before it went into receivership.

“Everybody in the world seemed to know the risks and I can’t believe that the council didn’t see it coming.

“Hopefully we can get the money back for Powys because we just can’t afford to lose it.”

Earlier this month a review found council finance bosses in Powys became “complacent” over investments and there were “weaknesses” in the system. But it did not hold any individual responsible.

Councillor John Corfield said he hoped the council would never let something like this happen again.

He said: “I just hope lessons have now been learnt.”

By Anwen Evans