Fred Goodwin and ex-RBS chiefs to appear in court

Fred Goodwin will face questions over the downfall of RBS. Picture: Ed Jones/AFP/Getty

Scotland on Sunday understands the former RBS chief executive, nicknamed “Fred the Shred”, has been named alongside other former executives who led the bank at the time of its collapse.

Goodwin, the former chairman Tom McKillop, former executive director of the bank’s investment arm Johnny Cameron and ex-finance director Guy Whittaker are set to give evidence in the court action that has been raised by the RBS Shareholders’ Action Group.

The four former RBS directors face being grilled by the Action Group’s lawyers to explain the sequence of events that led to the bank’s demise and its subsequent £45bn bail-out at taxpayers’ expense.

Last night the bank’s decision to put Goodwin and his former colleagues on its list of defence witnesses was welcomed by the RBS Action Group.

“We are very much looking forward to the opportunity to question these high profile former leaders of RBS on the witness stand,” an Action Group spokesman said.

The taxpayer-owned bank will meet the costs of providing legal representation for the four former executives with the help of liability insurance.

The Action Group is attempting to sue Goodwin, McKillop, Cameron and Whittaker, who are defendants in the case, as well as RBS  itself.

The RBS Shareholders’ Action Group is pursuing the civil court case, which is expected to go to trial in March next year, on behalf of thousands of investors, who lost money by subscribing for shares during the 2008 RBS Rights Issue.

Legal arguments are currently being heard in the Commercial Court in London, where the litigation is taking place. The Action Group is one of several claimants, but the only one which has named Goodwin and the other three former directors.

The group began its legal action with the hope that Goodwin would be brought to court for the first time. It is understood that the Action Group’s lawyers had been prepared to force him to take the stand. The fact that the former chief executive and his former colleagues have been volunteered by the bank, through its lawyers Herbert Smith Freehills, means it looks as though they will not have to do so.

The rights issue came after what is now widely seen as a disastrous takeover by RBS of Dutch bank ABN Amro – while Goodwin was chief executive. Investors who bought shares in 2008 to help stabilise the bank’s finances saw about 90 per cent wiped from the share price in months.

Many shareholders feel aggrieved, because they believe they were not given the full picture about the health of the bank, which they say would have put them off buying more shares.

It has been estimated that more than 63,000 small shareholders lost money, with many more losing out indirectly through pension funds invested in the bank. In London alone about 8,000 investors suffered losses of more than £40 million, while more than 1,700 Edinburgh-based investors had the biggest average per-head loss of nearly £5,500.

Goodwin’s association with the bank’s downfall saw much public anger directed against the former chief executive. RBS’s fall from grace saw Goodwin stripped of his knighthood by the Queen on the advice of the forfeiture committee, which found that he had brought the honours system into disrepute.

Last night the SNP deputy leader and Westminster spokesman Stewart Hosie said: “Given the RBS Action Group litigation covers a period when these gentlemen were at the helm, it is no surprise they have been listed as witnesses.

“I think the public will pay a great deal of attention to any evidence they may provide to identify even more clearly the culture that existed within RBS at that time.”

Last year RBS lost a legal battle to have Goodwin excluded from the forthcoming trial when RBS’s lead barrister suggested that the four ex-directors could feel a “sense of injustice” at “having their feet held to the fire”.

However the presiding judge Mr Justice Hildyard said Goodwin, McKillop, Cameron and Whittaker should remain as defendants.

Yesterday RBS declined to comment.