The Scottish Mail on Sunday
Meat pies at midnight, a £20m private jet and top bankers made to pull up weeds. How Fred the Shred lived in the lap of luxury ...and fostered a culture of fear
HIS role in the financial crisis that almost bankrupted Britain is already written into history. Fred Goodwin oversaw the collapse of RBS, which left one of the country’s oldest banks needing a massive, taxpayer-funded bail-out and saw him stripped of his knighthood.
But while his failure and humiliation have been played out publicly, the banker known universally as Fred The Shred is facing a new series of sensational revelations.
A new book questions whether he should ever have risen to the top of the industry, claiming the former accountant ‘effectively lied’ to land his first executive banking job.
Shredded, by Ian Fraser, is based on interviews with more than 120 current and former bank insiders, external advisers, politicians and others and shines new light on Goodwin’s management style.
Mr Fraser said last week: ‘Some ex-colleagues suspect Goodwin may have been a sociopath, a psychopath or have Asperger’s syndrome because of his astonishing ability to switch from being witty and convivial with a colleague over a few beers in a bar one evening, to being viciously brutal to the same colleague the next morning.
‘Goodwin didn’t seem to see anything unusual in such extremes of behaviour. Extremely competitive, Fred was unable to ever admit he had made a mistake, which was one of the reasons he found firing sen-
‘Colleagues suspected he was a psychopath’
ior colleagues difficult. Instead, he just tended to freeze them out.
‘He drove himself and RBS hard. His whole personality became wrapped up in the financial success of the bank, which made it difficult for him to accept he bore so much responsibility for its near-total collapse in October 2008.’
Edinburgh-based RBS is now 81 per cent taxpayer-owned following a £46 billion government bailout.
In the book, financial journalist Mr Fraser alleges Goodwin, now 55, exaggerated his part in the multinational liquidation of the Bank of Credit and Commerce International (BCCI), seeing him rewarded with top jobs at Clydesdale Bank and later at RBS which he might not otherwise have been offered.
Among those involved in the 1991 liquidation was accountancy firm Touche Ross (later Deloitte) where Goodwin, of Paisley, Renfrewshire, was the youngest-ever partner.
While six of his colleagues were appointed as liquidators and told to retrieve as much money as possible, Shredded claims Goodwin’s role was to run the operation’s office. It says: ‘Fred Goodwin effectively lied about, or certainly embellished, his CV. He did not “lead” and nor was he ever officially styled “chief operating officer” of the worldwide liquidation of BCCI, as he claimed. In fact, he had a clerical, back office role.
‘He would have been unlikely to have got his jobs as CEO of Clydes-
dale Bank and CEO of RBS if the truth had been known. Arguably, he got these jobs under false pretences.’
In the book, Edinburgh-based financier Peter de Vink recalls meeting Goodwin: ‘Before Fred arrived, I was told he had single-handedly led the BCCI liquidation. I expressed astonishment. When I asked Fred about it over dinner, he led us to believe he was the sole partner in charge – at no point did he acknowledge that he was part of a team.’
Later, Mr de Vink met ‘the senior Deloitte’s person on the BCCI liquidation’, Brian Smouha, and told him he was under the impression Goodwin led the operation. He says: ‘I’ll never forget his face. Without saying a word, Brian conveyed the impression he’d never heard anything so ridiculous in all his life.’
Whether his credentials were fabricated or not, Goodwin became Clydesdale Bank’s deputy chief executive in 1995. But within days of his arrival at the head office in Glasgow, he had ‘alienated almost the entire management team’.
When he was promoted to the top job in 1996, aged 37, his obsession with tidiness and decor became increasingly evident.
The book reveals: ‘One day, he forced a group of senior managers on to their hands and knees to pluck weeds from the car park.’
Despite a fixation with workplace minutiae, his extracurricular activities were on a far grander scale.
In 2002, two years after Goodwin became RBS chief executive, the bank bought a £20 million Dassault Falcon 900EX executive jet.
According to Shredded, so great was Goodwin and his wife’s personal use of the plane that he found himself in a row with the Inland Revenue, which claimed it should be regarded as a ‘benefit in kind’ – adding tens of thousands of pounds to their personal tax bills. The book says: ‘To avoid this, ex-insiders claim the bank transferred ownership of the jet from the Royal Bank of Scotland Group to RBS’s Lombard Aviation leasing subsidiary.
‘This gave the impression the Falcon was not just a personal plaything for the chief executive.’
In June 2005, Goodwin was said to have driven a £195,000 Lamborghini Murcielago at the Goodwood Festival of Speed in West Sussex, but misjudged a corner and hit a crash barrier. The book says: ‘The brand new Lamborghini ended up on its roof, causing £60,000 of damage.’ It claims Lamborghini and RBS staff were told to keep the crash quiet.
Shredded also says: ‘Goodwin regularly visited RAF Leuchars in Fife for joy rides in 111 Squadron’s Tornado F3 fighter jets. Ex-colleagues claim he got a particular thrill out of doing aerobatics at Mach 2.’
The bank’s top 30 executives were ‘treated’ to quarterly ‘mess dinners’, at which a state-of-the-art karaoke machine was installed. The book says: ‘Each of the top brass was expected to perform a pop song of their choice in front of colleagues as part of the entertainment.’
While Goodwin loved to deliver his version of Don McLean’s American Pie, bankers described the dinners as ‘excruciating’. At midnight, meat pies were delivered and they would drink until 3am – yet everyone was expected to be at work fresh and on time later that day.
Even as RBS headed for collapse under Goodwin’s ‘culture of fear’, he seemed unchanged. Mr Fraser says: ‘He was ostentatiously selfconfident when I met him in January 2008 – at a time when the rot had well and truly set in at RBS and the bank was already manipulating its numbers to mislead investors.’
Goodwin declined to comment on any of the claims.