Scottish Agenda: Further action against RBS casts shadow over the nation

By Ian Fraser

Published: The Sunday Times

Date: August 23rd, 2009

A possible lawsuit and an FSA inquiry into the ABN Amro takeover affects not only Sir Fred Goodwin but also Scotland

There was a bizarre symmetry to events involving the Royal Bank of Scotland last week. On the second anniversary of the credit crunch, the bank’s former chief executive, Sir Fred Goodwin, made a low-key homecoming after several months in exile.

A sombre-looking Sir Fred was photographed walking up the road to his “mansion” in Edinburgh’s plush Grange district. Having supposedly celebrated his 51st birthday alone on Monday, it seems Sir Fred will be joined by his wife, Joyce, and two children this week.

He is understood to have come back for the sake of the children. They had nothing to do with RBS’s destruction and deserve to lead normal lives in their home city rather than remain prisoners in a “gated community” in the Cote d’Azur.

But the disgraced banker, who came to epitomise everything that was wrong with greedy, hubristic and socially useless bankers following RBS’s collapse last year, will be testing the forgiveness of the Scottish population with this unexpected homecoming.

Friends were last week whispering that Sir Fred is keen to rehabilitate himself, perhaps through charity work. At last it seemed he was showing contrition and might even have learnt something.

It was therefore a shame that on the day he came back it was confirmed the Financial Services Authority had launched its “supervisory review” into RBS’s €70bn (£60bn) acquisition of ABN Amro. This was the deal too far that brought down RBS and caused Sir Fred’s ignominious downfall. The regulator will also examine whether investors who participated in RBS’s £12bn rights issue were misled.

The timing of the FSA inquiry could hardly be worse for Sir Fred. It comes as class actions against RBS for alleged misrepresentation of its financial position in 2007-08 led by Mississippi and Massachusetts pensions funds step up a gear. Such raking over the coals will remain a sword of Damocles hanging over Sir Fred’s head. He might even feel he deserves to be spared the uncertainty all this will entail, given the public villifaction he has been through.

Justice’s gain might be Scotland’s loss. The judicial quagmire into which RBS is descending at the moment could cast a longer-than-expected shadow over the nation’s reputation in finance, with aspects of these court cases and public inquiries popping up as news stories to blight the reputation of the bank and its former boss for years to come.

For a start, it is likely to make it impossible for Sir Fred to pursue my idea of putting himself forward as pro-bono successor to Jack Perry as chief executive at Scottish Enterprise. He still has time to apply; the Atlantic Quay-based quango won’t finalise its shortlist until September. But given the expected “noise” about his previous role at RBS’s helm, I suspect that Sir Fred won’t even bother to dust down his CV.

Rough times at GHA

Glasgow Housing Association, the largest landlord in Europe, seems to be tearing itself apart. The association, which has a portfolio of 70,000 houses and flats to its name, has been severely criticised by its regulator and last week lost the services of its chief executive, Taroub Zahran, and vice-chair Fred Shedden.

Many GHA homes were supposed to have been transferred to smaller, more locally based housing associations by now. But the quangocracy who run it have been accused of dragging their heels on this.

In a letter to the Glasgow Herald, Shedden last week lashed out at politicians for engineering his departure, and of putting their interests ahead of tenants’. I’m told that the city council was unable to forgive the GHA for awarding one of its three maintenance and repair contracts to an organisation other than the city council’s own City Building last year. Glasgow council’s leader, Steven Purcell, has now redressed the balance, however, after seemingly orchestrating Shedden’s departure and seizing the housing association’s reins.

At least that way he can prevent any further acts of “treachery”, even if it means having a run-in with Brussels over public-sector tendering.

Greyhound fuss

On Wednesday FirstGroup boss Sir Moir Lockhead trumpeted that he was bringing a touch of Americana to UK coach travel with the introduction of Greyhound buses to the market.

The buses will be introduced on the London to Portsmouth and Southampton routes next month, with further ones planned for 2010. The buses will be as sleek and modern as the Scenicruiser was in the 1950s, with complimentary newspapers, wi-fi, power sockets, air conditioning and leather seats.

Then the Office of Fair Trading spoilt Sir Moir’s party the next day. After a five-month investigation, the watchdog declared it had found evidence of practices likely to distort competition in the UK bus market. The entire UK bus industry, where Perth-based Stagecoach is another leading player, now faces a protracted competition commission inquiry.

I for one will be disappointed if this puts paid to FirstGroup’s plans to capitalise on its $2.8bn (£1.7bn) acquisition of the US-based Laidlaw International, Greyhound’s parent, by bringing the dogs across the Atlantic.

• This article was published in The Sunday Times on August 23rd, 2009. To view article on Times Online click here

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