Calls for Investigation into Royal Bank of Scotland's Finances and Potential Fraud

Strategic Insights -

Former Deputy Prime Minister John Prescott has stepped up demands for a police investigation into claims of fraud at the Royal Bank of Scotland (RBS), where Sir Fred Goodwin was the former chief executive. Prescott believes Goodwin should be stripped of his knighthood and made to "pay the consequences" for the bank's decline. Scottish Liberal Democrat leader Tavish Scott has also called for the Serious Fraud Office to launch an inquiry into a £12bn rights issue at RBS last April, which critics claim misled investors.

Key Takeaways:

  • The Serious Fraud Office has been urged to investigate a £12bn rights issue at RBS last April, which critics claim misled investors into believing the bank was a good investment.
  • Former Deputy Prime Minister John Prescott has demanded that Sir Fred Goodwin be stripped of his knighthood and made to "pay the consequences" for the bank's decline.
  • Scottish Liberal Democrat leader Tavish Scott has appealed for the Serious Fraud Office to launch an inquiry into the RBS rights issue.
  • Nationalist MSP Christine Grahame has written to Lothian and Borders police to request an investigation into potential criminal offenses by banking chiefs.
  • A police spokeswoman confirmed they will consider the contents of Grahame's letter.
  • First Minister Alex Salmond has backed the calls for action on the banking sector, but stopped short of demanding criminal proceedings.
  • Sir Fred Goodwin no longer warrants his title, according to Prescott, due to his role in the financial crisis.
  • A survey by the Herald found that the number of firms going bust in Scotland tripled in the last quarter of 2008, with 50 firms going into receivership compared to 17 in the final quarter of 2007.
  • The survey also found a dramatic increase in demand for business recovery specialists in recent months, compiled by KPMG and showing that RBS was the second bank at the centre of fraud allegations.
  • A former Bank of Scotland chief executive has lodged a formal complaint with the FSA, alleging that HBOS "put a favourable gloss" on its capital strength at the time of an ill-fated £4bn rights issue last year.

Statistics:

  • £12bn: The amount of the RBS rights issue in 2008.
  • 50: The number of firms going into receivership in Scotland between October and December 2008.
  • 17: The number of firms going into receivership in Scotland in the final quarter of 2007.
  • 2007: The year when the number of firms going bust in Scotland was 17.
  • 2008: The year when the number of firms going bust in Scotland tripled.
  • £4bn: The amount of the ill-fated HBOS rights issue last year.

Sources:

  • "Herald survey of leading accountants"
  • KPMG
  • Sunday Herald
  • FSA
  • The Herald