Despite settling with shareholders, RBS and Fred Goodwin should have to face a public inquiry

Once again the bankers, who are at the core of so many problems that have emerged to haunt this country and its economy since the financial crisis, have escaped a reckoning

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The Independent Online

So did RBS really spend £1bn of taxpayers money on settlements, legal costs and everything else, just to keep its former boss Fred Goodwin off the witness stand? Is this just the latest example of appalling behaviour from a state-backed bank that wrote the book on it? 

Up to a point. There was no way RBS’s current executives wanted the man once known as “The Shred” testifying about the events leading up to the bank raising £12bn from its shareholders only for the cash to evaporate in the wake of a £45bn state bailout (yes, those numbers are mad) a couple of months later. 

The formerly good name of the bank was shredded by that. Goodwin’s testimony might well have torn into it again, dragging RBS (quietly removed from the English and Welsh and City operations) through the mud one more time, and not just through whatever he was planning to say. 

The fresh blizzard of publicly given to the fact that the bailout happened – and to the fact that the Government is unlikely to recover the money – would be enough on its own. 

RBS, which still faces the prospect of an enormous US fine at some point this year, needed that like Donald Trump’s press secretary needs his boss taking to Twitter late on a Friday night. 

However, it would be wrong to say that was the only factor at play here. It’s a fact that civil cases like the one brought against RBS by its former investors almost always settle at some point and the bank will make the case that by doing so it has achieved “cost certainty”. 

Translation: If we hadn’t done this it might have cost taxpayers even more. What we ended up paying was more than we wanted to. We’re not admitting liability here. But whenever you go to court you take a risk and the settlement figure came in below the lower end of the range of damages suggested by our opponents. 

The problem, as critics (including me) have pointed out, is that not only did the men who cost taxpayers so much have their enormous defence costs funded by the taxpayer (RBS paid the bill and we own more than 70 per cent), they once again wriggled out of being called to account for their actions. 

A rump of former RBS smaller shareholders who were part of the action wanted to press ahead with the case regardless of the settlement offer, regardless of any settlement offer, because they wanted Goodwin and his pals on the stand. 

Many of them are elderly (a good number died before reaching this point) and the money was far less important to them than seeing the executives who destroyed their investments in front of a QC answering questions under oath about what they did, or did not do, in the run up to the £12bn cash call they participated in.

The trouble is there just weren’t enough of them, before even getting to the question of costs (and it’s a failing of the court system that ordinary people are prevented from seeking justice against big organisations as a result of the cost). 

So, in a very real sense, while they will get some of their money back they have still lost. And it’s not just them. We taxpayers who unwillingly bailed out this bank have lost along with them.

Once again the bankers, who are at the core of so many problems that have emerged to haunt this country and its economy since the financial crisis, have escaped a reckoning.

Goodwin had an uncomfortable few days when it looked like the trial might go ahead but now he gets to go back to his golf and his fancy cars. His colleagues – some of whom have managed to secure alternative employment – will go back to their jobs and their comfortable lives. The resentment among those living with the consequences of their economic vandalism will continue to fester unchecked. 

But victory, of a kind, could still be snatched from the jaws of this apparent defeat, if Parliament is so minded. Some members of the previous Treasury Committee have indicated that they are if they retain their seats, including Rachel Reeves, Wes Streeting and Jacob Rees-Mogg. 

Under the committee’s former chairman Andrew Tyrie, it wasn’t unusual for QCs to be called upon assist with inquiries when questioning of a more forensic nature was required. 

However, while select committees have, over the years, accrued more power, as much through precedent as anything else, and while they have successfully brought reluctant witnesses before them through the exertion of public pressure, they still don’t quite have the power their equivalents in the, say, the US Senate enjoy. They cannot compel testimony, for example. Witnesses don’t take an oath. 

Perhaps that needs to change. Perhaps Goodwin could yet do a service to the country by appearing as the first witness to swear to tell the truth before a beefed up Parliamentary Committee with enhanced investigative powers. 

There are those who argue that the current arrangement works well, and that this is unnecessary. It might limit what some witnesses are prepared to say, with no comment substituting for America’s “taking the fifth (amendment)”. 

However, the necessity of calling people like Goodwin to account should supersede that, and it’s not just him. RBS racked up a £125m bill to defend the case, including millions spent on defending the former RBS bosses named in the action. 

We need to hear from their successors on why it was necessary to spend such an appalling amount of money on them. Under oath. 

The boil of the financial crisis still festers. It has become a cancer that infects Britain’s body politic. Goodwin taking the stand to answer questions about this rights issue will not cure it. But it might help to demonstrate to the public that people can be called to account for their actions. That, if you’ll forgive me for quoting the possibly future, Prime Minister, Britain can be made into a country that works for the many not just the few.

There are powerful and influential people who will fiercely oppose such a step because they will be discomfited by it, including the current team at the top of RBS. They should be given short shrift. We have been listening to them for too long, and look where it has got us.