NatWest asked for the DTI investigation in March last year following suggestions in the press that the bank and Mr Frost were involved in a cover-up when Blue Arrow's share issue was first investigated by the DTI in 1988. The suggestions were based on evidence presented in the Blue Arrow trial then taking place.
Mr Frost was chief executive at the bank in 1987 when its City offshoot, County NatWest, was adviser to an pounds 837m share issue for the employment agency Blue Arrow. He stood down as chief executive last year after NatWest requested the DTI investigation and was appointed one of three deputy chairmen, an office he will continue to occupy until he retires in August.
Lord Alexander, the bank's chairman, said yesterday: 'The inspectors have concluded, after a thorough investigation, that there is absolutely no substance in the serious allegations made against the integrity of the bank and Tom Frost.' Mr Frost said he was glad that the record had finally been put straight.
The Blue Arrow affair has so far cost NatWest pounds 123m, made up of provisions against losses on the Blue Arrow shares, payments to the stockbroker UBS Phillips & Drew, legal costs and compensation to shareholders. Two further court cases arising from the affair may result in further liabilities totalling more than pounds 6m.
Lord Boardman, chairman of NatWest from 1983 to 1989, when he resigned over the affair, said yesterday that he had never doubted that 'there was no foundation for the allegations against the integrity of National Westminster Bank and . . . Tom Frost which were made in the course of the Blue Arrow criminal trial last year.
'But I regret that the inspectors did not take the opportunity to remove the criticisms, unfairly made in the report on the previous investigation, of Charles Green and Terry Green, then deputy group chief executives, and John Plastow, then an executive director of the bank.
'Their consequent resignations from the bank and the irreparable harm done to their distinguished business careers are vivid illustrations of the damage to individuals and the injustice that can result from this kind of inquisitorial investigation.'
Yesterday's report made it clear that Lord Boardman's resignation was not demanded by the Bank of England. It also outlines the strenuous efforts made by Lord Boardman to dissuade the Bank of England from its view that Sir Philip Wilkinson, the bank's deputy chairman who had been responsible for the bank's much-criticised internal report on the affair, should resign.
The Bank felt the report had been misleading and warned that it might take formal procedures to declare Sir Philip not a 'fit and proper person' to be a director of the bank.Reuse content