Fred Goodwin could face charges in bank malpractice probe

By IAN SWANSON
Published on 04/07/2012 09:27

SHAMED former Royal Bank of Scotland chief executive Fred Goodwin could face prosecution after the Crown Office announced it had launched an investigation into banking malpractice.

It said its serious and organised crime division had been secretly conducting a criminal investigation into the sector “for some time” and had decided to make it public because of “the degree of public concern about recently reported issues”.

The Crown Office confirmed that the failure of RBS in 2008 was among the events being examined.

And reports today claimed the investigation was likely to cover RBS’s acquisition of the toxic Dutch bank ABN Amro, which led to the near-collapse of RBS and the taxpayer-funded bail-out of at least £45.5 billion.

News of the criminal investigation came as ex-Barclays chief executive Bob Diamond, who quit yesterday over the rate-rigging scandal, was about to give evidence to MPs today and was expected to implicate the Bank of England in the row.

A newly-released record of a phone call has sparked questions about whether the Bank’s deputy governor Paul Tucker encouraged improper behaviour. Under company law it is an offence for a business to provide a misleading picture of its financial health.

In April 2008, just months before the crash, RBS persuaded investors to bankroll it to the tune of £12 billion without revealing how badly exposed it was to US mortgage debts.

A report by the Financial Services Authority last year said RBS had a “bias towards optimism” when making pronouncements about their prospects. Experts have argued the FSA report contained enough evidence about the behaviour of Mr Goodwin and other senior bankers to warrant a criminal investigation.

The Serious Fraud Office in London has said it will decide within a month whether a criminal prosecution is appropriate in the rate-rigging scandal.

Former lecturer in criminal procedure Alistair Bonnington said a prosecution would be easier in Scotland, where fraud is handled under common law.

Scotland was ideally placed to step in if English law proved problematic.

He said: “I don’t think there would be the slightest difficulty in jurisdiction in getting a case into court in Scotland.”

Labour’s Scottish deputy justice spokeswoman Jenny Marra said: “If crimes have been committed in Scotland, those charged must be prosecuted in the appropriate manner. It is critical that Scottish police work closely with agencies in other parts of the United Kingdom.”

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