RBS: The silent nine

HE WAS taking off while the shares were plummeting. As Jim Currie settled into the seat while the plane prepared to take off from Edinburgh Airport, his mobile rang.

The Scotsman had, at last, tracked down one of the nine independent non-executive directors of the Royal Bank of Scotland whose support for expansion had helped cause the biggest single loss in corporate history, the catastrophic collapse in its share price and the possible prospect of total nationalisation.

One of the duties of independent non-executive directors is to protect the interests of shareholders, according to RBS's corporate responsibility terms.

Asked if he had failed shareholders, Mr Currie replied: "Right… anyway… I will have a think about it. OK." Seconds later, he hung up.

Last night, politicians called for the removal of RBS's independent non-executive directors after it emerged none planned to step down over their roles in the turmoil. Instead, RBS reported that the three who were due to stand for re-election at the AGM later this year would do so.

Tavish Scott, leader of the Scottish Liberal Democrats, said it was difficult to see how "any of them can really survive" and called on the government, which now owns 70 per cent of RBS, to make wholesale changes.

Alex Neil, an SNP member of Holyrood's finance committee, said they should be forced to resign and that the Financial Services Authority should launch an investigation into whether they had carried out their statutory duties. "The independent non-executive directors have clearly failed," he said.

According to RBS, the task of these directors is to "scrutinise the performance of management", "satisfy themselves… that financial controls and system of risk management are robust and defensible" and "ensure that its obligations to its shareholders and others are understood and met".

While two independent non-executive directors stepped down late last year, that was unrelated to the current crisis. This left nine who had been party to the bank's calamitous recent expansion.

The Scotsman tried to track down and speak to them to ask what concerns they had raised about the group's takeover of ABN Amro in 2007. That takeover resulted in the bulk of the bank's non-cash loss of between 15 billion and 20 billion announced on Monday. Also, given that RBS's share price had plummeted from a high of about 5 in 2006 to only 11.6p on Tuesday, and with spectre of full nationalisation now looming, had they failed the shareholders?

The Scotsman began with Colin Buchan, who, according to RBS's website, is also a director of Standard Life, but a call to that company proved unhelpful. "The extension number is just ringing out," said a switchboard operator. "He may not be with us any more".

Mr Buchan is also a director of the Royal Scottish National Orchestra society, which agreed to pass on a message, but to no avail. Later calls to his home and his mobile went unanswered.

The only female independent non-executive director is Janis Kong, who is also a non-executive director of the Portmeirion Group, whose group secretary agreed to pass on a message. "I've got your number and I'll put you in touch," she said. Sadly, there was no return call.

There was, however, a return call from Archie Hunter, the chairman of the Macfarlane Group, but when the nature of the inquiry was explained, he was suddenly reluctant to comment. "Oh my goodness… Well, I would be surprised if you could get them (the nine] to speak to you. As non-executive directors, it is really not appropriate for me to make any comment at all."

When asked if he had failed shareholders, he avoided the question, but did at least offer to speak to RBS. "I will go back to the company and let us discuss your request. I will come back to you." Unfortunately, it was not Mr Hunter who came back to The Scotsman but another spokesman for RBS. Word of our inquiries had reached the ears of Miller McLean, the bank's group secretary, who wished it to be communicated that, while each of the nine non-executive directors was independent and free to act as he or she saw fit, the paper should not expect much assistance, and that, given the current crisis, each director was under severe pressure.

Since each of the nine was independent and free to act as he or she saw fit, had each of them contacted the group secretary and asked him to express their collective view? He assumed this was the view of the board.

The spokesman went on: "They are a unitary board and will communicate with shareholders in an orderly fashion, as would be expected of them. They did so at the last general meeting and will do so at the next."

He also pointed out the explanation and apology given by the chairman at the last general meeting.

Following this call, The Scotsman's inquiries were greeted by a wall of silence. Peter Sutherland is also the chairman of BP, and his secretary there took a note of our numbers and inquired if the interview would be over the telephone. However, the next day she said: "He hasn't got time to do this at the moment."

Bob Scott, the chairman of the Yell Group, responded through his secretary that any inquiry should be directed to RBS; Joe MacHale, the treasurer of the Macmillan Cancer Trust, failed to reply to messages left on the paper's behalf by the charity's assistant company secretary; while Sir Steve Robson, who is also a non-executive director of the Financial Reporting Council, failed to reply after a spokesman at the FRC said: "I will certainly pass on the message."

It was not possible to contact Bill Friedrich, the former deputy chief executive with BG Group. The Scotsman did e-mail him via RBS. There was no reply.

Last night, Colin McLean, the managing director of Scottish Value Management, said the independent non-executive directors at RBS had failed and he expected them to be cleared out by the government.

FACT BOX

NON-EXECUTIVE directors at Royal Bank of Scotland are appointed for three-year terms by the nominations committee then confirmed by the votes of shareholders at the AGM.

Their annual fees are currently set at 72,500 for an expected commitment of two days per month, which includes attendance and preparation for about nine scheduled board meetings.

According to RBS, non-executive directors should "constructively challenge and help to develop proposals on strategy by bringing a different perspective".

It says they should also "scrutinise the performance of management" as well as satisfy themselves "on the integrity of financial information and that financial controls and systems of risk management are robust and defensible".

Nine independent non-executive directors, one fallen giant but no answers

COLIN BUCHAN

Age: 54

Mr Buchan was appointed to the board in June 2002 and re-appointed last April. His expertise is in "very large risk management in the equities business", says RBS. A former head of equities at UBS Warburg, he is also a director of the RSNO. He has 40,000 RBS shares.

JIM CURRIE

Age: 67

Appointed to the board in November 2001, Mr Currie is a former director general at the European Commission, where his responsibility was environmental policy. He is currently a director of the Met Office and Total Upstream UK. He has 1,668 shares in RBS.

BILL FRIEDRICH

Age: 60

Mr Friedrich was appointed to board in March 2006 and was formerly a deputy chief executive of BG Group plc. As a former partner of Shearman and Sterling, he practised as a general corporate lawyer for leading financial institutions. He has 110,475 RBS shares.

ARCHIE HUNTER

Age: 65

Mr Hunter was appointed to the board in September 2004 and re-elected in 2007. He is a past-president of the Institute of Chartered Accountants of Scotland and is currently chairman of the Macfarlane Group Plc. He has 10,500 shares in RBS.

JANIS KONG

Age: 58

Mrs Kong was appointed to the board in January 2006 and was formerly the executive chairman of Heathrow Airport Ltd. She is currently a non-executive director of the Portmeirion Group plc and a board member of Visit Britain. She has 26,000 RBS shares.

JOE MacHALE

Age: 57

Mr MacHale was appointed to the board in September 2004. He held a number of senior executive positions with JP Morgan, including chief executive of JP Morgan Europe, Middle East and Africa. He has 72,200 RBS shares.

SIR STEVE ROBSON

Age: 65

Described as a no-nonsense Yorkshireman with a sincere belief in public service, he was second permanent secretary to the Treasury and worked closely with Gordon Brown. A non-executive director of the Financial Reporting Council, he is not listed as RBS shareholder.

BOB SCOTT

Age: 67

Appointed to the board in January 2001, Mr Scott is the board's most senior independent director, with wide experience in the international insurance business. He is a former group chief executive of CGNU (now Aviva). He owns 23,344 shares.

PETER SUTHERLAND

Age: 63

Appointed to the board in January 2001, he was formerly attorney-general of Ireland and European Commissioner responsible for competition policy. He is chairman of BP and Goldman Sachs International and financial adviser to the Holy See. Owns 17,643 shares in RBS.

INTERVIEW 1

ARCHIE HUNTER: "Oh my goodness… well, I would be surprised if you could get them to speak to you, Stephen, and that is not meant as an obstruction in any way at all. As non-executive directors, it is really not appropriate for me to make any comment at all."

SM: Given the very serious nature of the crisis that the Royal Bank of Scotland is in and given that your role is to represent and protect shareholders, that is why we want to speak to you all. It was to find out whether you felt your concerns were not heeded too, or, given your job is to protect shareholders, that in this current crisis you failed?"

ARCHIE HUNTER: "Let me…let me…you are interested in speaking to all the non-executive directors?"

SM: "Yes, I'm tracking them down…"

ARCHIE HUNTER: "OK, well, let me…well, I think there should be one response from the group. I will need to go back, too...What I can offer you is that I will go back to the bank and I will have them note your request and see how we respond to it."

SM: "I appreciate that, but there are nine of you, and if everyone answers with one voice, then that is one point. I'm speaking to you just now – do you feel as a non-executive director that you failed the shareholders?"

ARCHIE HUNTER: "Let me do what I said I would do, Stephen, that is me trying to help you in this – I will go back to the company and let us discuss your request. I will come back to you."

SM: "Thank you – I appreciate you doing that."

INTERVIEW 2

JIM CURRIE: "I was just about to switch off. I'm on a flight and we are about to taxi out of Edinburgh."

SM: "What time should I call back?"

JIM CURRIE: "Err, hmm, I don't know. What are you calling about?"

SM: "We are doing a piece about RBS and we are speaking to all the non-executive directors who were involved in the meetings and to have a chat to them about the current situation, their views on the ABN deal and whether they felt they had failed the shareholders?"

JIM CURRIE: "Right…anyway…I will have a think about it. OK."

SM: "I will call you later."

• Sir Fred paid a heavy price after deciding he wanted to go Dutch