Fred the Shred in the dock
Shamed banker to face accusers in £700m case by RBS investor group
SHAMED banker Fred ‘the Shred’ Goodwin will finally face a court grilling by Royal Bank of Scotland shareholders almost a decade after the lending giant’s near collapse.
The bank faces a multimillion-pound lawsuit for allegedly misleading investors when it asked for extra cash in 2008 at the height of the financial crisis.
Months later, taxpayers had to pump in £46billion to keep RBS afloat while shareholders suffered devastating losses of 80 per cent of their stake.
RBS will this week begin the defence of a £700million lawsuit brought by 9,000 retail investors and 18 institutions in the RBS Shareholder Action Group.
The group hopes the 14-week trial will finally see Mr Goodwin – nicknamed ‘Fred the Shred’ for his ruthless approach to business – called to account in public over the fiasco that led up to the Government bailout.
The former chief executive was stripped of his knighthood after RBS’s implosion, but still enjoys a £342,500-a-year, taxpayerfunded pension from the bank.
Other millionaire former RBS executives set to give evidence include former chairman Sir Tom McKillop, former investment bank chief Johnny Cameron and former finance director Guy Whittaker.
The legal action centres on a rescue effort overseen by Mr Goodwin in April 2008 when RBS asked existing shareholders to pump £12billion into the bank after it led a consortium that spent £49billion on Dutch bank ABN Amro.
Shareholders claim they were left nursing hefty losses following the cash call after RBS shares plunged 90 per cent and the Government had to step in when the deal turned toxic.
In 2009, Mr Goodwin appeared before a Treasury select committee and admitted his disastrous ABN Amro takeover was a
‘Lot of explaining to do to staff’
‘bad decision’ but insisted he acted in a ‘responsible fashion’.
While settling the lion’s share of the claims out of court without admitting liability, the bank has failed to strike a deal with the last tranche of shareholders and any chance of avoiding a costly legal battle with a lastditch settlement seems remote.
The case is due to begin on Monday at the High Court in London. However, court documents show that Mr Goodwin is not expected to be crossexamined until June 8, General Election day.
Sir Tom McKillop is due to appear on June 7, with Mr Whittaker giving evidence on June 13 and Mr Cameron following on June 30. While the prospect of these men effectively being put in the dock will be relished by millions who saw their pensions and investments hit by the downfall of RBS, the legal bill will not.
The bank is legally obliged to provide lawyers for the former directors, but the lender’s legal costs have drawn sharp criticism, as the bill escalates towards £125million – including £6.5million defending Mr Goodwin, 58, and the ex-RBS bosses.
Three members of the influential Treasury select committee warned last month that RBS could face a parliamentary inquiry into the mounting legal costs, which will make it one of the most costly civil defences in British history.
At the time, Labour MP Rachel Reeves said: ‘If RBS loses this case, the bank will have a lot of explaining to do to staff, shareholders and the public on why it spent a fortune on this case.’
It comes hard on the heels of Chancellor Philip Hammond’s admission that the Government is prepared to sell its remaining near-73 per cent stake in RBS at a loss to the public purse.
The bank has enjoyed a brighter start to the year after posting its first quarterly profit since 2015 at £259million.