Now RBS investors hit by row over £200m payout

Thousands face delays as red flag is raised on bill

THOUSANDS of investors who won a £200 million payout from Royal Bank of Scotland in the summer are facing delays getting their money amid legal wrangling.

The Mail on Sunday can reveal serious questions have been raised about the running of the organisation behind the action.

The RBOS Shareholders Action Group was co-founded in 2009 by controversial Irish businessman Gerard Walsh, who as we revealed last week was described by a Jersey court in 2014 as a ‘fraudster’.

Sources close to Mr Walsh said he denies wrongdoing. They said he was neither a defendant nor a witness in the Jersey case and did not have an opportunity to contest the court’s judgment.

Concerns relating to RBS include an agreement the action group made in 2015 to pay £20 million to a company called Evalusafety Limited, although the identities of those in line for a share of that payout have not been verified by lawyers. Mystery also surrounds around 75 million ‘phantom shares’ for which the action group claimed compensation. Lawyers say the shares appear never to have existed.

This has led to fears that small investors may suffer further delays and receive a lower payout than they hoped.

In an out- of- court settlement this summer that was heralded as a great victory, investors were compensated for losses on RBS shares they bought to help the bank bolster its capital during the financial crisis of 2008.

They claimed they were misled by the lender and its former chief executive Fred ‘The Shred’ Goodwin.

Investors paid at least £2 per share in 2008 and were awarded 82p in the settlement.

However, there is likely to be around £100 million to distribute after all the costs have been taken off.

Mr Walsh, 60, is now up against a team of l awyers and i nvestment experts acting for octogenarian tycoon Trevor Hemmings, the former owner of the Blackpool Tower.

Several of Mr Hemmings’ companies were claimants with the action group. Two of them provided finance and in return for additional funding one of them, Manx Capital Partners Limited, was given sole and exclusive manage- ment of the litigation on an irrevocable basis. Manx Capital is now working on the task of verifying and administering the claims so that investors can be paid out.

It is being assisted by law firm Signature Litigation. A spokesman for Signature said payments had been held up by ‘difficulties caused by the unclear financial structure and costs created by the action group company’.

I n additi on, Manx Capital has obtained a High Court order to prevent the action group from supplanting Signature and appointing its own law firm instead, which it says would increase costs and create further delay. The judge directed the order to be served on the Acti o n Group and on Mr Walsh. Si gnature had raised red flags over the £ 20 million bill from Evalusafety. Manx said it believed the deal is for ‘success payments to be paid to Evalusafety including we believe a substantial sum to Gerard Walsh’ and added that it had to ensure any payments were made ‘ properly, with a full account being made to the claimants.’ It is not known whether Mr Walsh is a beneficiary.

While the payment may be legitimate, Signature is refusing to pay without first receiving full details about the charge and the names of the beneficiaries. Signature hopes to pay investors their compensation in the New Year.

However, a spokesman said ‘much will depend’ on whether the action group and Mr Walsh ‘continue to put pressure on us’ to make ‘success payments’ that the firm is ‘presently unable to verify as being appropriate’. Signature is also disputing the existence of the 75 million shares for which the action group claimed compensation.

Mr Walsh said through his lawyers last night that he was unable to comment in the time available.