Thousands of claimants seeking compensation from the Royal Bank of Scotland nine years after the bank’s near collapse have died waiting to see the likes of disgraced former chief executive Fred Goodwin in court, it has been revealed.
Mr Goodwin and other senior RBS executives are due to be cross-examined in a 14-week trial which begins on Monday and is expected to amount to the most expensive case in British legal history.
No senior UK bank executive has been a defendant in a civil or criminal trial to account for what happened when RBS was bailed out to the tune of £45.5 billion by the government in 2008.
Mr Goodwin will take the stand on 8 June – the day of the general election.
The case was brought by the bank’s investors over a rights issue – where an institution asks shareholders and investors for cash, often to shore up a business in return for discounted shares – which came just months before the beleaguered bank’s near collapse.
The rights issue raised more than £12bn for RBS at the time but investors claim they were misled about the true financial state of the bank when it asked for the cash.
In court documents, more than 4,000 claimants, many of whom are pensioners, are said to have died in the eight years since the litigants launched their case. There were originally 27,000 claimants suing RBS but a third of those recently settled. Roughly 9,000 are left – including Essex County Council and Wells Fargo Bank.
One of the claimants, pensioner John Greenwood, 75, from West Yorkshire, who lost 70 per cent of his investment, said: “They [RBS] could have sorted all this out years ago. They could have given all the information, which was requested and let the court decide, but they’ve obstructed all along… they don’t want people to know what really went on.”
Louise Haigh, a Labour MP who has pressured the government over RBS’ expenditure on the case, said: “Thousands of people who lost so much because of RBS’ failures have died while waiting to see Goodwin finally grilled in court. It’s a complex case, so this was always going to take years, but it is devastating they will not get to hear their arguments voiced against one of the architects of the financial crisis.”
RBS has already spent £100 million defending the case, with £800m provisioned in total. The bank is armed with a team of lawyers, some reportedly on £1,000 per hour.
RBS, which is 72 per cent owned by the government, is still struggling after its ninth straight annual loss. The taxpayer will end up footing the bill if RBS loses the case.
A spokesman for the bank declined to comment directly but pointed out that chairman Sir Howard Davies said last week: “We have reached settlement with shareholders representing around 87 per cent by value of the total claim in the 2008 rights issue shareholder litigation. The settlement does not constitute any admission of liability by the bank but allows us to minimise material litigation expense and management distraction.
“The costs we are having to meet are high because of the extraordinary breadth and complexity of the case.”