Vince Cable: RBS report recommends prosecution
Vince Cable is poised to take action against Fred Goodwin and a small number of other former Royal Bank of Scotland directors as a direct result of the bank’s collapse.
By James Quinn
6:00AM BST 17 Jun 2012
Mr Cable, Secretary of State for Business, Innovation and Skills (BIS), is to pursue the former bankers by moving to disqualify them from sitting on company boards in the future.
The Sunday Telegraph understands that a detailed legal report prepared for Mr Cable found that there is “prosecutable evidence” which can be used to bring about the disqualifications.
The report, prepared by counsel instructed by the Secretary of State in December, is known to have been presented to Mr Cable in recent weeks.
In addition to Mr Goodwin, who was stripped of his knighthood earlier this year, it is believed that Johnny Cameron, former head of RBS’s investment bank, plus a small number of other directors might also be pursued. Disqualification can be enacted either through the courts – which is thought to be more likely in this case – or via civil action. A voluntary ban is also a possibility.
Although a final decision has not been made, it is thought an announcement will be made by Mr Cable within the next few weeks.
A Whitehall source said that Mr Cable had in the past made clear his feelings with regards to the bank’s collapse and the need to hold those responsible to account if there was sufficient evidence of wrongdoing. The disqualifications, when they are made, will be the most high-profile since the so-called “Phoenix Four” were banned from acting as company directors for a combined total of 19 years in May last year.
The quartet, former directors of MG Rover, voluntarily agreed to the bans from BIS following a “lengthy and complex investigation” into the car maker’s collapse.
Mr Cable’s instruction of external counsel followed the Financial Services Authority’s report into the collapse of the Scottish lender, which was itself triggered by an in-depth campaign by The Sunday Telegraph and The Daily Telegraph.
At the time, Mr Cable said: “Now that I have received the FSA’s report, I am immediately instructing counsel to provide further advice.”
On the back of an earlier short-form FSA inquiry conducted by PricewaterhouseCoopers, he had previously said there was insufficient evidence to bring disqualification proceedings. The FSA report, published in December 2011, revealed that senior management made some poor decisions in the run-up to the Government’s bail-out of RBS, particularly in relation to the acquisition of ABN Amro.
In addition, it said that the bank had a weak capital position and was too reliant on short-term wholesale funding. Mr Cameron is the only member of RBS’s senior management team to have been censured as a result of the bank’s collapse. In May 2010 he was prohibited by the FSA from working full time or performing any “significant influence function” in a bank or insurance company.
A BIS spokesman declined to comment. Messrs Goodwin and Cameron declined to comment.
News of the proposed disqualifications comes as Mr Cable will, on Wednesday, announce his plans to empower investors in relation to executive pay, following extensive investor consultation.
The watered-down plans will lead to binding shareholder votes, every three years, unless pay packages are amended.
Regarding the proposals, which follow a series of high-profile investor revolts at a string of FTSE 100 companies, it is thought Mr Cable will say the moves strengthen shareholders’ hands at the same time as giving them a framework for the long-term.
However, he will stress he does not want to over-regulate for fear of scaring off investment.