WADR Barry, Having read the Audit Commission report (Risk and Return) I think you are being a little economical with the truth. The signs were there and most councils did not invest or chose to pull out their investments.
Report here:-
http://www5.tmbc.gov.uk/akstonbridge/images/att7937.pdf
The question is if you personally had lost shed loads of your own money twenty years ago trying to get the odd extra percentage point on your investments by buying magic beans from BCCI, would you have been so ready to buy Icelandic magic beans or would you, having had your fingers burnt once, stick to a safer investment strategy?????