Police to probe £1billion HBOS fraud ‘cover up’

POLICE are examining allegations by MPs that a £1bn fraud carried out at HBOS’s Reading branch at the height of the financial crisis was covered up by bosses.

Six HBOS employees were jailed last year for a combined total of 47 years after they were found to have wrecked dozens of family businesses instead of helping them, and spent the profits on prostitutes, holidays and luxury goods.

An internal report by HBOSowner Lloyds that was leaked earlier this year claimed HBOS directors, including then chief executive Andy Hornby, knew his staff were ruining small businesses for their own personal gain. Hornby, 51, is now the joint chief operating officer of GVC Holdings, which owns bookies Ladbrokes Coral.

A group of MPs have now called on police to conduct a fresh probe into the fraud to ensure all of those involved in the scandal are held accountable. The all-party parliamentary group on fair business banking said it believes the fraud ‘extends to a higher level than those that have already been convicted’.

It adds: ‘The boards of both HBOS and then Lloyds Banking Group knew about the HBOS Reading fraud from an early stage. If dealt with approclaimed priately at the time, years of suffering for hundreds of individuals could have been prevented. Instead, both institutions concealed the fraud and went after the victims for their remaining assets.’

Lloyds rescued HBOS from the brink of collapse in 2008, but a memo written by a former Lloyds employee bosses knew about the fraud before it sealed the £12bn takeover.

Kevin Hollinrake MP, cochairman of the parliamentary group, said: ‘They not only failed to act on the evidence of serious criminal fraud but fired the whistleblower that had revealed the extent of the criminal activities. In an act of calculated naivety, they believed that the fraud will simply go away.

‘Quite honestly, it would have gone away, had it not been for the extraordinary efforts of dedicated individuals who had been the victims of a severe injustice and wished to hold those responsible to account.’

A Police Scotland spokesman said: ‘We have received a report from the parliamentary group and the information is currently being assessed. This is at an early stage.’

A Lloyds spokesman said: ‘We would always fully assist with any such inquiry were one to be launched.’