December 2017
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Will the RBS (IMHO) “fraudsters” finally pay for their (IMHO) lies?

A group of shareholders are suing RBS directors (including Fred Goodwin and Sir Tom McKIllop) and the bank for compensation for money they lost when they invested in RBS’s £12bn rights issue in 2008. The investors claim that directors wrongfully told them the bank was financially sound. Just 6 months after the rights issue, RBS became Britain’s largest bankruptcy and was rescued by a £45.5bn taxpayer-funded bail-out.

Fred Goodwin first came to my attention in 2005. Just after I published RIP-OFF The scandalous inside story of the consulting money machine, I was contacted by someone who had worked with Fred Goodwin at Deloittes on the BCCI (Bank of Credit and Commerce International) bankruptcy. This person alleged that the team led by Fred Goodwin had defrauded BCCI creditors of around £50m. The person also gave me details of how Goodwin and Deloittes allegedly carried out the fraud.

I reported this to the SFO and to the Bank of England. I even had a phone conversation with a very senior figure at the BoE during which I suggested that Goodwin was not a fit person to run a bank. But this was at a time when Blair and Brown were sucking up to bankers – they gave honours to 23 bankers several of whom ruined the banks they were running – so no action was taken.

The claim against Goodwin. McKillop and others centres around the prospectus issued in connection with the 2008 £12bn rights issue. I haven’t read the prospectus, but while writing FLEECED How we’ve been betrayed by politicians, bureaucrats and bankers I did look at the statements made by the at that time Sir Fred and Sir Tom in their last financial report just before the bank they were supposed to be running dramatically went tits up.

Fred Goodwin was Forbes Magazine Businessman of the Year in 2002. In early 2008, Fred was able to announce record results for 2007: ‘For the Royal Bank of Scotland Group, 2007 was defined by another strong operating performance and by the acquisition of ABN Amro’. Fred helpfully explained to the world at large why his bank was so successful: ‘Delivering such a robust financial performance in this environment is the consequence of action in two areas: over a number of years we have diversified the Group’s income streams and last year also saw us benefit from our focus on credit quality and risk management’.

Some of us might be tempted to wonder whether Fred’s claim of ‘focus on credit quality and risk management’ might not constitute a crime for gross misuse and abuse of the English language. It might even be construed as misleading shareholders and therefore worthy of prosecution.

Just before the bank’s ignominious collapse, Fred’s chairman, the £750,000 a year former pharmaceuticals boss Sir Tom McKillop also seemed proud of the bank’s diversification strategy and admirable credit control: ‘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’.

IMHO the statements made by Goodwin and McKillop, shortly before the bank collapsed, are intended to mislead shareholders and I hope that the bank’s shareholders grind these two (IMHO) “greedy, lying fraudsters” into the dust.

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