RBS scandal fraudster and team reaped £1.9m

Police turn the spotlight on action group after examining a dossier compiled by regulator

A FRAUDSTER behind a controversial action group set up to sue the Royal Bank of Scotland is being accused of using small investors’ money to pay himself and his colleagues £1.9 million.

The revelation comes as the RBoS Shareholders Action Group faces a police probe in the wake of concerns raised by a year-long investigation by The Mail on Sunday.

The group, co-founded by Irish businessman Gerard Walsh, was established to sue the bank for compensation for investors who felt they were duped into buying shares in 2008. However, it has since been sidelined from management of the claim.

Manx Capital, an investment vehicle of tycoon Trevor Hemmings, took its place at the top of the mass legal action.

The 7,000 small investors who signed up to the group won a £200 million settlement from RBS in June last year, meaning the bank could avoid a high- profile court case. Much of the £200 million has yet to be paid out and serious concerns have been raised about the action group company’s management of the claim, although these are firmly dismissed by the group.

This newspaper revealed last year that Walsh was described as a fraudster by the Jersey Royal Court in 2014. In 1997, the High Court of Ireland found him ‘guilty of fraudulent misrepresentation’ by posing as a Lamborghini salesman. A court heard earlier this year that Walsh was claiming a £3.75 million success fee from the £200 million RBS settlement, despite allegedly presenting himself as a volunteer.

In a High Court dispute between the action group company and Manx, a judge heard that Walsh was charging £ 80 an hour plus expenses for his services.

Manx, which instructs law firm Signature Litigation on behalf of investors who signed up to the action group, has now provided further details of payments made to Walsh.

In a letter sent to investors, Signature says the action group collected £8 million in subscription fees from both small investors and large insti- tutional funds which originally signed up for the claim.

The letter also alleges that up to £1.9 million was paid to Walsh, as well as entities or people believed to be associated with him.

It said this money apparently went towards paying for leaflets, professional fees and administrative charges.

The RBoS Shareholders Action Group did not address this figure when asked for comment, but said Walsh’s consultancy contract with t he company came t o an end 18 months ago when RBS agreed to a settlement.

A spokesman for the group added: ‘We have no issues with him whatsoever.’

The group also pointed out that it has had a ‘serious falling out’ with Signature Litigation.

The spokesman added: ‘The group has been run in an honourable and ethical way throughout its ten-year existence.’

The Signature Litigation letter, seen by The Mail on Sunday, also refers to Walsh’s links to two other organisations – the RBS GRG Business Action Group, set up to sue the same bank over mistreatment of small businesses, and a campaign group set up following the Grenfell Tower disaster.

Directors of the Grenfell group have denied knowledge of Walsh’s involvement. There is no suggestion of wrongdoing in respect of either of these groups.

It emerged last month that the Ministry of Justice – the Government department which regulates claims management companies – has passed a dossier of information relating to the RBoS Shareholders Action Group on to the City of London Police.

Several small investors have also asked the City of London Police to investigate this year.

The f orce confirmed i t has received the MoJ dossier and said it is assessing its contents.

This came after Liberal Democrat MP Norman Lamb, who was alerted to the firm by this newspaper’s investigation, discussed his concerns with MoJ representatives.

The MoJ has also told Lamb that it is planning to pass the dossier to the Solicitors Regulation Authority, and is now considering whether to also share it with the Serious Fraud Office and the Financial Conduct Authority.

Lamb said: ‘ These new revelations of the amount of money that it appears Gerard Walsh was personally making out of this operation make it all the more important that the police and potentially the Serious Fraud Office treat this case with the utmost seriousness.’