RBS helped bankroll Europe's last dictator

Outcry forces state-owned bank to sever Belarus ties

The Royal Bank of Scotland faces more damaging revelations about its ethical record after it emerged that the bank was part of a deal to issue more than $800m (£489m) in Belarusian government bonds earlier this year, a month after the country's leader, Alexander Lukashenko, ordered the brutal repression of pro-democracy campaigners.

The majority state-owned bank has now agreed to abandon doing any more deals with Mr Lukashenko after it was shamed by dissidents over its role in organising the bond issue, The Independent can reveal.

While many international enterprises refuse to invest in the country and its repressive regime, RBS became involved in January this year, alongside the Russian bank Sberbank, BNP Paribas and Deutsche Bank. At the time, hundreds of people had just been arrested by Mr Lukashenko's KGB secret police and allegations of torture were widespread and credible.

RBS has also recently come under fire for continuing to invest in American arms manufacturers that make cluster bombs.

In Belarus, hundreds of opposition activists were arrested and many of those who stood against Mr Lukashenko in last December's disputed elections have since been thrown in jail after a series of show trials that have been condemned by international observers.

The EU and the United States have since expanded individual sanctions against Mr Lukashenko and hundreds of his lieutenants, but there are currently no prohibitions on doing business directly with the Belarusian state. Nonetheless many pro-democracy groups have urged Western businesses to shun the regime until their demands for reform are met.

A previous bond deal done by the same syndicate of banks last October, two months before the crackdown, netted the Belarusian government a further $1bn. The deals were a lifeline for a country that has been struggling to stay afloat amid widespread government corruption, economic mismanagement and consistent human rights violations. Belarusian bonds have some of the lowest credit ratings available, worse than Greece's, while its foreign currency reserves are all but depleted. Minsk is hoping to be bailed out by the IMF who will decide today whether it will finance a new loan.

Belarusian activists from Free Belarus Now confronted RBS executives last week in Edinburgh alongside Index on Censorship, which has campaigned against British businesses conducting deals inside Belarus while Mr Lukashenko remains in power. Following the meeting, the bank issued a statement saying it would no longer do business with Minsk.

"Given sanctions, the deteriorating political situation in Belarus and the fact that it has reneged on key elements of the IMF programme, RBS has ceased any type of capital-raising for or on behalf of the Belarus republic," the statement read. "In assessing where we do business, we have a responsibility to consider a number of factors, including social and ethical issues and compliance with the letter and spirit of all international sanctions."

RBS is the only British bank to have recently done financial deals directly with the Belarusian government. The revelation is embarrassing as it comes at a time of growing concern over the bank's ethical investment record.

Earlier this month The Independent revealed how British high street banks, including RBS, were continuing to invest hundreds of millions of pounds in companies that manufacture cluster bombs – despite a global ban outlawing the production and trade of the weapons.

RBS, which was bailed out by the taxpayer in 2008 and is now 84 per cent owned by the Government, was part of a banking syndicate that provided the American arms manufacturer Alliant Techsystems with a $1bn five-year credit facility, with RBS itself loaning $80m. It has also underwritten $110.1m in bonds to Alliant Techsystems and Lockheed Martin. Both companies have been criticised by arms groups for making vital components for cluster bombs.

RBS claims that it takes human rights violations seriously. On its website, the bank states: "The Royal Bank of Scotland Group is committed to respecting and upholding human rights in all areas of our operations and within our sphere of influence." However, bank executives only agreed to turn their backs on Belarus after six months of intense lobbying.

Dissidents welcomed RBS's decision last night. Natalia Koliada, from Free Belarus Now, said: "When British businesses invest in Belarus, or RBS sells their government's bonds, it helps support an authoritarian regime. In Belarus the KGB is torturing and kidnapping people." Mike Harris, head of advocacy at Index on Censorship, added: "This couldn't come at a more crucial time. RBS has sent a clear signal not to risk investing in a regime that violates fundamental human rights."

RBS and Belarus

June 2010 President Alexander Lukashenko announces that he will run again for president in December's election.

August 2010 RBS, alongside three other banks, financially backs a $1bn (£610m) Belarusian bond deal.

September 2010 Campaigning begins. For Belarus, the campaign is comparatively open and free. But suspicions are raised when Oleg Bibenin, a former journalist and press secretary to Mr Lukashenko's chief rival Andrei Sannikov, is found hanged.

December 2010 After winning 80 per cent of the vote in an election that fell far short of international standards, thousands of Belarusians protest. Mr Lukashenko responds with a violent crackdown.

January 2011 As the arrests continue, RBS and the same three banks, announce a new government bond deal worth $800m.

February 2011 The first sentences are handed down against pro-democracy campaigners. International observers and rights groups condemn the trials as unfair.

March 2011 Ales Mikhalevich, an opposition politician who ran against Mr Lukashenko, is released from KGB custody. He flees the country and alleges widespread torture.

April 2011 Explosion hits a metro station in Minsk, killing 11. Mr Lukashenko says it is a plot to destabilise the country; opposition groups suspect that the attack is used as a pretext to a wider crackdown.

May 2011 Andrei Sannikov, the main opposition candidate, is convicted of "organising a mass riot" and sentenced to five years in prison. The EU and US place sanctions on Mr Lukashenko.

Start your day with The Independent, sign up for daily news emails
footballHe started just four months ago
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Arts and Entertainment
(L-R) Amanda Peet as Tina Morris, Melanie Lynskey as Michelle Pierson, Abby Ryder Fortson as Sophie Pierson, Mark Duplass as Brett Pierson and Steve Zissis as Alex Pappas in Togetherness
TV First US networks like HBO shook up drama - now it's comedy's turn
Pool with a view: the mMarina Bay Sands in Singapore
travel From Haiti and Alaska to Namibia and Iceland
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect