Those were the words Gloucester Shire Council’s director of corporate services Paul Sheridan used to preface his report to council on it’s investments at the October meeting. The report outlined a possible loss of $500,000 as a result of the global financial crisis.

Council had invested $500,000 with Sigma Finance Corporation, a London based company, following an introduction via the Commonwealth Bank.

Mr Sheridan said that Sigma has since ceased trading and nominated Ernst Young as receiver.

He said council is continuing to wait for further information on how it’s investment will be effected and the extent of the loss, but in his report he said it is expected that “this loss will be very significant with a little chance of return.”

In addressing councillors, Mr Sheridan said that “things certainly don’t look good” but council is yet to receive any official confirmation from the investment company.

Mr Sheridan said he expects other councils will also feel the impact of changes in the global finance market.

He moved to reassure councillors that council’s other investments were safe.

General Manager Allan Young said councillors will be kept up to date with what is happening.

“Nothing could have prevented what appears to have transpired,” he said.

“We are managing ratepayers money, we are genuinely concerned about future shocks from financial markets,” he said.

Several councillors urged for a review of councils investment portfolio.

“Should we be contemplating our overall investment strategy to address the risk factors in this current climate,” Cr Richard Webb said.

“So do we need to err on the side of caution,” Cr Geoff Slack questioned.

While Cr Jerry Germon said she felt the Commonwealth Bank had a moral and ethical obligation to cover council’s shortfall after introducing the council to the finance company.

Senior staff gave an undertaking to keep councillors informed of any further developments and that any necessary actions to ensure investments were protected would be made.