THE chairman of state-backed Royal Bank of Scotland has apologised for providing “materially incorrect” evidence to a Westminster committee which was investigating the bank’s treatment of small businesses.
Sir Philip Hampton admitted that two representatives of the organisation last year gave wrong information to the Treasury Select Committee about its Global Restructuring Group (GRG), which was tasked with turning around struggling small businesses. RBS - which is 80 per cent owned by the taxpayer - was facing claims that it pushed small firms towards collapse so it could buy back their assets at rock-bottom prices.
The two executives, Chris Sullivan, RBS deputy chief executive and Derek Sach, head of the GRG unit, both argued that the unit was not a “profit centre” when asked by MPs on the committee in June.
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But in a letter written to the committee’s chairman, Andrew Tyrie, in August, but published this week, Sir Philip insisted that they had made an “honest mistake” in their description of the firm.
He said: “The matter you raised - whether or not RBS executives misled the committee - is of course a very serious one.
“The evidence the bank’s representatives provided was not correct in answering the question as to whether GRG was a profit centre.”
He added: “This lack of clarity on an important point is very disappointing to the committee as it is to me and I apologise for it.”
Sir Philip agreed that the definition of GRG as a profit centre in a report into the affair by ex-Bank of England deputy governor Sir Andrew Large was “reasonable and correct”.
“The answer to whether Sir Andrew was right is ‘yes’,” he wrote. “It is plain this is the answer the committee should have received and I am sorry it did not. You rightly expect the highest standards from those that provide evidence to the committee. I regret that we have not met those standards on this occasion.”
But Mr Tyrie described the error as “more than a simple mistake”.
“Parliament expects witnesses to give straightforward evidence. Two senior managers at RBS fell short of this standard at a hearing with the Treasury Committee in June,” Mr Tyrie said: “Anybody can make a simple mistake in their evidence. But this was more than that - it was materially incorrect on a crucial point and unacceptable.”
He added: “RBS has done the right thing and apologised.”
The saga is the second time RBS has issued an apology in a matter of days, coming after the bank was last week forced to admit it had got its sums wrong over a stress test by European regulators to see if lenders could withstand another major financial crisis.
That in itself came just a day after RBS was fined £56 million by UK regulators over an IT meltdown in 2012 and a week after being hit with penalties of £399 million over its role in manipulating foreign exchange markets.
Sach - who is expected to leave the bank in early 2015 - and Sullivan are also believed to have “clarified” their evidence to the committee.
A spokeswoman for RBS said: “Both Derek Sach and Chris Sullivan have clarified the evidence they provided to the Treasury Committee. The Bank has apologised unreservedly for any confusion caused. This was not intentional.”
RBS commissioned law firm Clifford Chance to review GRG, which was closed over the summer. The review was published in April with no evidence of the bank defrauding customers.
However, the organisation is still pending a probe by the Financial Conduct Authority over its treatment of small companies.
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