Sir Fred could face legal action over role at failed bank
RBS board launches investigation into what former chief executive knew about risky sub-prime trading
The new board of Royal Bank of Scotland has two investigations under way which are understood to be building a case for breach of duty against Sir Fred Goodwin, and possibly other former senior RBS officers, the Independent on Sunday has learnt.
At their centre is not only Sir Fred's pension of £693,000 a year, but also the management of the bank during Sir Fred's tenure, including the disastrous takeover of ABN-Amro and RBS's exposure to sub-prime assets.
The news follows claims yesterday that the RBS's multibillion-pound trading in these now almost worthless assets was kept from the bank's board. They also seem to fly in the face of statements Sir Fred made to the City in 2007 that RBS had kept out of the sub-prime market.
Last night, Labour MP John Mann, who sits on the Treasury Select Committee, said: "There is clearly something there to be pursued, and I know that the highest ranks of the Government are aware of that as well. I would welcome any action that unpicks the scandal that Sir Fred Goodwin's pension and the RBS have become."
Michael Fallon, the senior Conservative on the committee, said that, while he felt it would be "fraught with difficulties", he supported the idea of legal action against Sir Fred over his stewardship of the bank, whose £28bn losses last year led to a Government bailout of billions of pounds.
There has been scepticism about the prospect of taking legal action to reclaim most of Sir Fred's pension, a view forcefully made when Lord Myners was questioned by the Treasury Select Committee last Tuesday. But at that hearing a more devastating avenue was touched upon when Mr Mann asked: "How can there be any specific legal case against Fred Goodwin, who has been given a package and has signed off that package?"
To which Lord Myners replied: "I think, Mr Mann, you are basing your observations on the pension alone." The implication being that legal moves – possibly an action for breach of duty – might be taken against Sir Fred over some aspect of the running of RBS during his time as chief executive.
Then, yesterday, The Daily Telegraph reported: "Billions of pounds of "toxic' sub-prime mortgages were bought by Royal Bank of Scotland traders in a spree that was not disclosed to the bank's board. Traders received multi-billion-pound bonuses after acquiring more than £30bn of sub-prime assets during early 2007."
The paper added that Sir Fred was under pressure to disclose what he did, or did not, know of this trading. It was certainly substantial. The sub-prime acquisitions by RBS's US subsidiary Citizens – whose chief executive Larry Fish retired on a pension of $2.2m (£1.5m) a year – are believed to date from late 2006.
Sir Fred will also have to explain statements he made in early 2007, in which he was emphatic that RBS had no exposure to sub-prime. On 1 March, announcing RBS's £9.19bn profit for the previous year, Sir Fred said: "We have retained our inherently cautious stance towards higher risk activities such as unsecured consumer lending and sub-prime credit markets."
Meanwhile, there were reports yesterday that former RBS chairman Sir Tom McKillop has written to the Treasury committee, claiming Lord Myners knew the size of the pension before it was signed off. Another Tory member of the committee, Andrew Tyrie, said Sir Tom's version of events "flatly contradicted" the version offered by Lord Myners.
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Fearne Cotton quits Radio 1 after ten years for 'family and new adventures'
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is shot dead
Leonard Nimoy dead: Star Trek actor dies after suffering lung disease
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin, says West should 'abandon zero-sum mentality'
What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...