Tycoon’s fight for bank shareholders
How a landmark legal victory has descended into acrimony for investors
ISLE of Man- based tycoon Trevor Hemmings likes to stay out of the limelight but behind the scenes he is determined to recoup some of his RBS losses. In 2009 he was reported to have lost £700 million as a result of the financial crash, a chunk of it through the bailed-out bank.
Like many others, his companies turned to the RBOS Shareholders Action Group in an attempt to get some of that money back.
Now his firms are battling the action group and its controversial co-founder Gerard Walsh.
Mr Hemmings is motivated by his own interests of course – but he could emerge as a champion for the small investors who could benefit on his coat-tails.
The 82- year- old is an unlikely white knight. He is best-known as the entrepreneur behind Preston North End FC, Blackpool Tower – and for bringing Center Parcs to Britain.
A racing fanatic, his horse Hedgehunter was one of his three Grand National winners. Through some of his companies he is a major claimant in the shareholder group that won a £200 million settlement from RBS earlier this year.
Mr Hemmings supplied millions of pounds worth of backing for the action through his firm London and Northern, as well as through another of his businesses, Manx Capital Partners, to pay legal bills. Alongside others who funded the litigation, he will receive a financial return on some of his sizeable outlay.
But he appears to be driven for a desire for justice – not just recouping some of his losses – as he also put up £10 million at the eleventh hour to allow the case to go forward. He is making no return on that chunk of money.
When the action group won its £ 200 million settlement against RBS in the summer, all seemed rosy on the surface for the 9,000 investors – from the large claimants like Mr Hemmings to the humblest small shareholder.
They were hailing a landmark victory for the RBOS Shareholders Action Group, paving the way for similar cases.
But those small investors have yet to be paid and firms and advisers working for Mr Hemmings are now spearheading the fight to get their money back amid serious questions over the running of the action group.
Once costs have been deducted, around half of the settlement or £100 million will be left to share out between investors. This is not unusual because the costs of bringing lengthy and complex cases are heavy. But small investors are concerned about continuing delays and bills that could eat further into their eventual payouts. Phillip Croxson, 65, from Oxfordshire, is a former employee of RBS subsidiary Nat West. In 2008, he invested more than £20,000 in 10,000 RBS shares. Like so many others, he put his faith in the action group.
Now he says of it: ‘I have quite a number of concerns. It’s never been entirely clear to me who the action group actually are.
‘Who runs it? Who set it up? How many people are on their payroll? They’ve never been transparent in my experience.
‘It’s all become quite a mess, to put it mildly… I don’t know what payments have been made to third parties or other companies who might be doing work for them.’
To fully understand the small shareholders’ angst, we have to go back to 2008 when they were persuaded – duped, they would say – into investing their money in the bank, paying between 200p and 230p per share. It was only months later – after raising £12 billion from small investors and City institutions – that RBS, then led by controversial chief executive Fred Goodwin, had to be rescued by the Government in a £45.5billion bailout.
Devastation followed for RBS’s small investors as the value of their shares – in some cases a large part of their life savings – plummeted.
This summer the action group was finally due to have its day in court. But at the last moment, before Goodwin could take the stand, RBS agreed an out-of-court settlement – under which the bank would pay out 82p per share – to avoid a public legal battle.
Five months on, investors have yet to be paid and lawyers from City law firm Signature Litigation have raised red f l ags over a £20 million bill for a firm called Evalusafety Limited. They have also said they are ‘investigating an overstatement of 75 million shares’ that formed part of the claim but ‘appear never to have been verified by the action group’.
And there is a legal battle holding up the payment process, as firms acting for Mr Hemmings seek to keep control of administering the settlement away from the action group and Mr Walsh.
Mr Walsh ceased to be a director of the action group in 2011 when he was made bankrupt. He has since acted as an adviser.
Mr Hemmings’ Manx Capital Partners says it believes Mr Walsh ‘remains not only instrumental but effectively the main day- to- day manager and co-ordinator of the business of the action group company’. A Manx spokesman said Sig- nature Litigation is making good and quick progress. It said the main factor in the delay was ‘the action group’s failure to provide necessary information which it has within its possession’ and added it had recently received some key documents by order of the court.
Barry Middleton, 73, an ex-RBS employee from Aberdeenshire, bought 6,000 shares as part of the 2008 capital raising. He is also concerned about the £20 million the action group says it needs to hand over to Evalusafety Limited.
He says: ‘They certainly never told me that this was requested from the pot.
‘ That’s got me thinking: What have they done with all the money we’ve paid into the action group over the years?’
For the likes of Mr Middleton, the long wait goes on.