£1bn fraud ‘covered up by bosses at HBOS’
BOSSES of stricken Halifax/ Bank of Scotland covered up a £1billion fraud at the height of the financial crisis, a leaked report claims.
Directors including then chief executive Andy Hornby knew criminal staff at the lender’s Reading branch were wrecking companies for a profit, the internal report found.
It claims that bosses realised the fraud had cost the bank at least £800million, but they massaged the figures to make it look as if the bill was lower so they would not have to tell shareholders about what had happened.
Meanwhile, victims who lost their homes, businesses and marriages because of the fraud were ignored and even chased for money by the bank. The bank branch bosses and their cronies, who were jailed last year for a total of almost 50 years, spent their takings on prostitutes, holidays and luxury goods. Today the scandal is thought to have cost Lloyds Bank as much as £1billion.
Halifax/Bank of Scotland chiefs are alleged to have known many of the details as long ago as 2008, but sought to keep them private as the bank teetered on the brink of collapse and a rescue takeover by rival Lloyds was pushed through.
This toxic deal forced the state to bail out Lloyds with £20.3billion of taxpayers’ cash.
Written by a Lloyds employee in 2013, the leaked document claims that if HBOS had been honest about the fraud, the takeover would never have gone ahead and the disaster might have been avoided. It says: ‘Proper disclosure of the Read- ing incident in July 2007 would have rewritten history for HBOS, Lloyds TSB and the Government.
‘The strategy since January 2007, and possibly from 2005, has been to conceal the Reading incident. All those involved have condoned criminality and injustice.’
The internal report was written at the request of Lloyds’ audit department after its author raised concerns. She left the bank with a payoff and gagging agreement after handing it over to management.
Accounting rules state that large losses which might affect a business’s stability must be declared to the stock market. The report claims that at HBOS, it was judged that a loss larger than £285million would have to be made public.
Staff had already allegedly estimated that the bank had suffered losses of at least £800million from the fraud. But senior staff are said to have wrongly claimed that the bill was no more than £262.4million.
Lloyds has commissioned retired High Court judge Dame Linda Dobbs to investigate cover- up claims, and the National Crime Agency is also investigating.
Anthony Stansfeld, police and crime commissioner of Thames Valley Police which prosecuted the Reading fraudsters, has demanded that Lloyds bosses come clean about what they knew.
A Lloyds spokesman said the leaked report was handed to the Financial Conduct Authority and police in 2014. He added that the bank has also given the document to Dame Linda.
Mr Hornby is now chief operating officer at betting company GVC Holdings, owner of Ladbrokes Coral. He and GVC did not respond to requests for comment.
‘Victims lost homes and businesses’