COUNCIL leader Rod Bluh has been accused of breaking the rules and risking £450,000 worth of public funds after investing the cash in a private wi-fi company.

The comments came at last night’s heated scrutiny committee meeting, at the Civic offices, where councillors grilled cabinet members about why a decision to loan the money to Digital City UK had been announced in mid-November – without prior consultation.

Part of the meeting revolved around how Digital City UK – which was registered as a company in March 2009 – was able to gain the loan without it being tendered out to other companies.

However most of the discussion concerned the level of risk the council was taking with the money, which will help provide the entire borough with limited free internet access in April and Highworth going live on Wednesday.

Chairman of the committee, Coun Derique Montaut, said there had been a “great deal of concern” over why the issue had not been scrutinised previously.

He said: “Using £450,000 of public sector money in a deal with the private sector is open to risk. Do you think it is right to make this decision off your own back?”

Coun Bluh responded: “This is a commercial decision, in the new world in which we all live more and more commercial decisions will be made.

“An opportunity was put to us, and we were asked if we wanted to invest.

“As a result a whole set of meetings took place and we spent a huge amount of time on this.

“Had we not done it the way we did, the deal would not have gone through. We don’t do anything without considering the implications.

“But we would not have done this had it not been in accordance with council policy.”

Coun Bluh added that he had already received 12 inquiries about the project – including from the Republic of Ireland.

“This is a commercial venture that will bring commercial return. The only affects on capital budgets will be if this loan does not get repaid in full.”

However many members of the public and opposition councillors continued to press Coun Bluh, with Des Moffat (Lab, western) claiming that by not informing the authority’s 59 councillors they had broken the council’s constitution.

Coun Junab Ali (Lab, central) added that he planned to refer the issue to external auditors.

However, Stephen Taylor, the council’s director of law and democratic services, assured the committee that due process had been followed.

Members of the public also had a say asking whether an upgraded service with Digital City UK would cost as little as £7 which is currently on offer from a major internet provider.

Coun Peter Greenhalgh responded: “I am sure they will be offering comparable of better prices.”