The Bank of England has also launched an investigation into alleged breaches of customer confidentiality, whereby private information in 13 bank accounts at NatWest and Barclays was allegedly obtained by Citibank.
The prosecution is being brought by Raymond Hill, a London property developer whose company, Mainhurry, was put into receivership by Citibank in 1989. The case comes before Guildhall Magistrates Court on Tuesday.
The Independent on Sunday has obtained a copy of a report on Mr Hill's financial affairs prepared for John D Scotcher, a senior executive at Citibank's private banking operation in Berkeley Square, London, by Magnum Investigators International, a private detective firm based in Victoria.
In the report, Magnum supplied information including the numbers and balance of 13 different accounts. These include the accounts of Mr Hill at NatWest in Bayswater, west London and Barclays in St Hellier, Jersey. There were also accounts for Mr Hill's companies at Barclays in Camden, north London, and accounts held at both NatWest and Barclays branches in Jersey belonging to a company that had no connection with Mr Hill apart from working for him on a transaction unrelated to the Citibank loan.
Both the clearing banks have investigated the matter and claim the information was not provided to Magnum by the banks, which could not have done this legitimately anyway. But they also say they have no reason to believe their computers were hacked into.
Mr Hill is also suing Citibank for dollars 48m ( pounds 31m) in New York, alleging breach of faith, breach of fiduciary duty, tortious interference with contracts, and fraud. Citibank is defending the case.
The US bank has obtained a judgment against Mr Hill for pounds 1.5m as a guarantee of the loans of Mainhurry, but it has not yet proceeded against him for the money.
It said it could not discuss the Magnum report because it was sub judice and there were client confidentiality issues. However, it did say: 'Citibank has never been involved in obtaining unauthorised information relating to its clients and we would never condone such action under any circumstance.'
Magnum went into creditors' voluntary liquidation with a deficit of pounds 547,000 in January this year. However, its senior executives, including the director who produced the report on Mr Hill, have started work again in a new company, Magnum Partnership, which is unconnected to the charges. Magnum did not return the Independent on Sunday's calls.
Mr Hill said he was first approached by Citibank, which had advertised its private bank in publications such as Country Life, in early 1988. He was developing a 55,000 sq ft shopping centre in the old Harrods depository in south Manchester.
Although he already had funding from NatWest and another property finance company, Mr Hill was impressed by Citibank's executives, Vern Vella and Keith Risk, the son of Sir Thomas Risk, former Governor of the Bank of Scotland. They said they had personal discretion to lend dollars 5m, and could lend dollars 25m with one signature from the private bank's regional office in Zurich and dollars 100m on approval from New York.
In June 1988 Mr Hill signed up for a pounds 3.7m facility, of which pounds 1.5m was drawn down to finance the construction of the Manchester site.
Mr Hill discovered that Mr Risk lived around the corner from his home in Bayswater. He invited the banker for dinner, but soon found that Mr Risk had taken relationship banking beyond its normal meaning by starting an affair with his wife. Mr and Mrs Hill have divorced.
Mr Hill complained to Citibank and Mr Risk, who had confessed all to a superior called Chris Roberts, was moved from the account in February 1989. Mr Roberts then met Mr Hill, who wanted to draw down the remaining pounds 2.2m of the loan facility. The client was told the deal would be aborted as Mainhurry had run up pounds 30,000 more in interest than permitted under the terms of the loan agreement.
Although Mr Hill did not know it, Citibank had brought over a US work- out specialist, Frank Fabi, to supervise the running down of the private bank's loan book, which then stood at more than pounds 100m. Mr Fabi's assistant, Mr Scotcher, was put in charge of Mr Hill's account.
Citibank's decision not to allow Mr Hill to draw down the second part of his loan gave him problems with contractors, which he could not pay. To revitalise the scheme, he tried to refinance the loan and approached Mr Roberts, who by then had left Citibank, for help.
Finance was arranged through a subsidiary of Tiphook, the container firm, but the deal fell through. KPMG Peat Marwick was appointed as receiver in November 1989.
The site was sold to the now-defunct Norfolk House property group for pounds 1.2m. Norfolk completed the development, with a couple of slight amendments, before it went into receivership.
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