THE Bank of Scotland has written off nearly all of a controversial £12.2 million loan it handed to its former managing director.
Bank of Scotland has written off nearly all of a controversial £12.2 million loan it handed to a former managing director of the bank, according to documents filed with Companies House.
Bosses at the taxpayer-backed bank have recouped just £600,000 of money it loaned to a company owned by former Dunfermline Athletic boss Gavin Masterton, who retired from BoS in 2001 with a £250,000-a-year pension. The former banker’s firm, East End Park Ltd, was given the loan – secured against the club’s stadium – at the height of the 2008 financial crisis and told it would not have to make repayments for the next 35 years.
However, the company and Dunfermline Athletic both went into administration last year and documents show the bulk of the £12.2m loan has now been written off by the bank.
Despite being valued at £11.2m in 2011, East End Park stadium was sold by administrators KPMG to a fan-led buyout team for just £700,000. The documents also reportedly show that KPMG has started legal proceedings to recover £116,000 which another of Mr Masterton’s companies owes the now-defunct stadium firm.
Liberal Democrat leader and Mid Scotland and Fife MSP Willie Rennie said: “It’s a bargain basement deal for Pars supporters but is the kind of loss even Fred Goodwin would blush at. Serious questions are being asked at Bank of Scotland about the terms of the original deal. There will still be rough times ahead but Dunfermline is on the right track now.”
Documents lodged at Companies House are reported to show Dunfermline Athletic’s ground was valued at £5.9m in 2007, but this increased to £11.2m the following year, the same period in which East End Park Ltd secured its £12.2m loan from BoS.
East End Park Ltd went into administration last year and a new report by KPMG on this process shows it sold the firm’s only asset, the football stadium, to Pars United Limited for £700,000, with £600,000 of that going to BoS towards the loan and the rest covering the administrator’s expenses. It is understood the bank does not expect to receive any more money towards the £12.2m it was owed. The report also states that a £116,967 debt owed to East End Park Ltd by its parent company Charlestown Holdings Limited (CHL) – a firm owned by Mr Masterton – has been passed to legal agents to chase.
CHL, which is ten months late in filing its accounts, was also reported to have failed to repay a £600,000 loan from the taxpayer-owned Royal Bank of Scotland – around half of which was personally guaranteed by Mr Masterton. The Dunfermline-based firm is also subject to an ongoing court action by its former chief executive William Hodgins and owes Stagecoach tycoon Sir Brian Souter nearly £1m in a loan due to be repaid later this year.
BoS’s £12.2m loan to Mr Masterton’s East End Park Ltd came just four years after the Edinburgh-based institution had written off a £4.5m loan to another firm partly owned by Mr Masterton, Wood Investments (Scotland) Limited.
Mr Masterton could not be reached for comment tonight. RBS and BoS declined to comment.