Monday, March 23, 2009

Royal Bank of Scotland to be probed by FSA over ‘bullied directors’ allegations

What a happy bunch of people the Royal Bank of Scotland board members must have been, as allegations of bullying of non-executive board members is revealed by Labour MSP Lord Foulkes.

Sounds a bit like some of the goings on at other institutions in Scotland we could name …

The Herald reports :

Regulator to probe ‘bullying’ of RBS directors

MICHAEL SETTLE, UK Political Editor March 23 2009

The Royal Bank of Scotland last night denied there was any evidence that its non-executive board members were bullied into silence over its risky business ventures, as the beleaguered institution was hit by another series of damaging claims.

Lord Foulkes, the Labour MSP and former Scotland Office minister, raised concerns after being briefed by ex-RBS insiders. They said non-executive directors faced "intimidation" about asking searching questions about the bank's activities, for fear they might not be reappointed.

He suggested that if this was true, it could lead to criminal prosecution.

The peer has also asked Lord Turner, chairman of the Financial Services Authority (FSA), to investigate whether the bank made "knowingly false statements", which could have led potential investors to believe RBS's position was more favourable than it was.

The City of London watchdog said it would look into the issues raised by the former minister.

However, a spokeswoman for the Edinburgh-based bank told The Herald it was "not aware of any evidence to support" the claim of intimidation and no non-executive director past or present had raised the issue with the company or the FSA.

She said if Lord Foulkes had any evidence to support the assertion, "it would be in the interests of all parties if he shared it".

The spokeswoman added: "The new management team and everyone at RBS is fully focused on fixing the company's problems and returning RBS to standalone strength. Only then will we be in a position to repay the support of the taxpayer and all our shareholders."

Meantime, a call was made for RBS to stop further pension payments to Sir Fred Goodwin, its former chief executive, after an ex-employee's claims pointed to "a shocking culture of extravagance and greed at RBS at the expense of savers and shareholders".

Vince Cable, the Liberal Democrats' Treasury spokesman, has written to Chancellor Alistair Darling, and Lord Turner, demanding an immediate halt to payments from Sir Fred's £703,000-a-year pension.

The whistleblower claims the lobby outside Sir Fred's office was redecorated with £1000-a-roll wallpaper, £100,000 was spent on part-time chauffeurs and £5.3m was spent refurbishing a grade-A listed building in Edinburgh for Sir Fred's hospitality use.

Lord Oakeshott, the LibDem Treasury spokesman in the Lords, said: "It looks like the Court of King Fred the First of Scotland with directors and auditors as well-fed lapdogs around the throne."

In a separate development, the UK Government was reported to be planning a £60m bailout of Dunfermline Building Society, one of Scotland's oldest, amid fears it is poised to reveal huge losses, RBS, which in January posted a £24bn loss for 2008, the biggest in UK corporate history, faces another £500m loss through exposure to Cattles, the troubled loans firm.

At Westminster, the Conservatives said the Prime Minister's appointment of Lord Myners, already under fire over Sir Fred's pension, was "fast turning from an embarrassing appointment to a serious liability".

The city minister, tasked by Gordon Brown with clamping down on corporate tax avoidance, was facing questions about a property business he set up in the tax haven of Bermuda.

Lord Myners reportedly earned nearly £200,000 in a year as chairman of Aspen Insurance Holdings. He insisted he had "no continuing interest in or income from" the company.

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