June 2024

How the Establishment protected the RBS ‘banksters’

(Wednesday blog)

Establishment cover-up?

Some of you may have watched a BBC2 documentary last night – “The bank that almost broke Britain”. In it, a string of politicians and civil servants tried to make us believe that only their courage and decisiveness saved the British economy from a massive collapse in the banking crisis of 2008. This convenient rewriting of history slightly ignores the fact that these professional spongers handed Britain’s bankrupt banks hundreds of billions of pounds of taxpayers’ money for nothing in return. There were no salary caps for bankers, no restrictions on bankers’ bonuses and absolutely no prosecutions for lying, thieving banksters.

I found the programme’s lies and hagiography particularly difficult to stomach as I was involved very peripherally in the fun and games. In 2005, I published my book “RIP-OFF The Scandalous Inside Story of the Management Consulting Money Machine”. Shortly after publication, I was contacted by someone who claimed to have worked closely with Fred Goodwin (later CEO of the catastrophically badly-managed RBS) on the liquidation of the infamous BCCI (Bank of Credit and Commerce International).

This person said that they could provide evidence that the team run by our favourite banker, Sir Fred, had dishonestly extracted tens of millions of pounds from the BCCI’s creditors. If this person’s allegations were true, then the case could be made that Fred was not a fit and proper person to run a bank.

I contacted the SFO and spoke to a really dopey, useless plod so gave that up as a lost cause. However, I did manage to arrange a phone interview with a very senior individual at the Bank of England (BoE). After I explained the situation, the BoE executive refused to look at the evidence I offered to provide and refused to investigate. You have to remember that, at the time, our Fred was a close chum of Tony and Gordon, that Tony had visited Fred at the Scottish HQ of RBS and that the Queen had even conducted the opening ceremony for RBS’s new £700m Scottish HQ at Gogarburn near Edinburgh. Perhaps appropriately, from 1924 to 1999 Gogarburn was best known as the site for Scotland’s largest mental asylum.

When is a lie not a lie? When it’s a really big one?

But let’s move on from my trivial accusations. Let’s look at what RBS’s CEO, Fred Goodwin and Chairman, Tom McKillop, told RBS shareholders just a few months before they extracted £12bn extra funding from shareholders and just before RBS became the largest banking collapse in British history.

Freddie Boy claimed that RBS has managed to deliver “such a robust performance” because “over a number of years we have diversified the Group’s income streams” and benefited “from our focus on credit quality and risk management”. No warning there about the imminent disaster.

What about Chairman wee Tommy McKillop? What did he have to say to shareholders just prior to the collapse? “We have witnessed the benefits of the Group’s long-standing focus on credit quality and the diversification of our income streams which have allowed us to deliver record profits.” But wee Tommy, when you wrote this, your bank was teetering on the brink of bankruptcy. Weren’t you aware of this? You were the £750,000-a-year RBS Chairman after all.

I don’t know the law. But it’s my understanding that it’s a criminal offence for company executives to make false and misleading statements to shareholders. So I would have thought that CEO Freddy and Chairman Tommy claiming everything at RBS was hunky dory just before the bank’s implosion suggested they were being more than slightly economical with the truth.

But was there any attempt to prosecute them? Of course not. Nobody in power wanted to rock the boat by revealing to us pig-ignorant plebs how thoroughly we’d been shafted by the (IMHO) corrupt, self-serving, greedy, grasping ruling elites.

Accountants not accountable?

One could also wonder how RBS’s accountants signed off the Group’s accounts as smelling of roses just before the biggest banking collapse in British history.

Wait a minute. If I remember correctly, RBS’s accountants were none other than Big Four firm Deloittes – Fred’s former employers before he moved from being a beancounter to becoming the world’s worst banker.

A bit of you cover my back and I’ll cover yours, perhaps?

5 comments to How the Establishment protected the RBS ‘banksters’

  • Stillreading

    Revolting, wasn’t it, to be reminded a decade later how those responsible managed to proclaim themselves saviours of the UK banking system as if they’d had no responsibility for its downfall? Perhaps, obnoxious as it was to see how Blair during his Premiership had cuddled up to Fred the Shred, it was Gordon Brown who was the most culpable. It was he who during his years as Chancellor and, therefore, in charge of the Regulatory System, chose to look the other way while Fred the Shred pursued his unethical and financially hazardous activities. As for the auditors, they were presumably in it up to their necks. Those who suffered from the collapse in 2001 of Equitable Life were not surprised when RBS went down, having seen it all before. Thousands of us nearly two decades later are living on greatly diminished pensions, our investments and annuities and our financial security in old age having been stolen from us, with the evident sanction of Gordon Brown and the Regulators. Equitable’s auditors, Ernst & Young, blithely signed off “creative accounting” (aka fraudulent accounting) year on year and got away with it, so no surprise that Deloittes did the same for Fred. And none of those responsible for Equitable or RBS suffered personal financial loss or significant punishment, so it’s all set to happen again, probably sooner rather than later.

  • William Boreham

    I read in an interview with Alistair Darling, Chancellor at that time, that Britain came within hours of  “the breakdown of law and order” on the day the government was forced to bail out RBS at the heart of the 2008 financial crisis. There were genuine concerns prior to the bail out of RBS in October 2008, that the collapse of the bank could lead to violence in Britain’s streets.
    “Gordon [Brown] and I were faced with the imminent collapse of what was then the world’s biggest bank, we were very clear that if RBS had collapsed, it would have brought down the entire system with it,” Had the government failed to bail RBS out, Darling said, it “would have had to close its doors, switch off the cash machines.”  That in turn, would have caused “complete panic” among the British public. I bank with the RBS, but I was always careful to keep a sizable amount of ready cash under the mattress as it were, along with some currency of a selection of rich and stable countries, plus some gold and silver. It’s idiotic to rely on invisible, electronic cash (cards) alone. I keep reading reports that the financial situation internationally is worse now that that before the 2007 crash. And with the buffoons we have negotiating Brexit, think I’ll also stock-up on food and other necessities.

  • A Thorpe

    I thought I was reading my own views in the first few sentences. All boasting about how they saved the bank with a bail out. The truth is the saved the bank by putting all of us in debt. They all had one thing in common – they were Scottish and I suspect they took great pleasure in knowing they were mainly shafting the English. When we are out of the EU the next referendum should be for English independence.

  • John G Fields

    Mr Thorpe. I have to say, sir, that your last sentence
    was music to my ears. “When we are out of the EU the next
    referendum should be for English independence.”
    It is time that we stopped listening to the moans and groans emanating from the Irish ,Scotch and Welsh.
    Let us not forget that if our referendum on Brexit
    had been an English vote only the percentage gap
    between leave and remain would have been far greater.

  • Roy Hartwell

    I noted today that the Chairman of RBS issued severe warnings of a recession if we left the EU without a deal !! Now call me cynical but….1. They’re a great organisation to make predictions ! 2. Is he preparing the way for another major bank failure but blaming it on Brexit rather than their own ineptitude ( I could use a stronger term but I might be sued)

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