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Snow: ‘If RBS bosses didn’t know what was going on, they should be fired and prosecuted’

December 17th, 2013 (minor revisions December 18th, 2013)

Here’s the Channel 4 News report on the behaviour of RBS and its global restructuring group from Monday 25 November — the day that the Tomlinson Report was published. Jon Snow opened the piece by saying:-

“They’re accused of deliberately driving viable small businesses into the ground – in order to seize their assets on the cheap. The Chancellor [George Osborne] had one word for it “outrageous”. Yet this was no shady protection racket – this was state-owned Royal Bank of Scotland…”

The bulletin then moved on to a report by Channel 4 News business correspondent and ex Times journalist Siobhan Kennedy, who examined how the Edinburgh-based bank bullied the Lancashire-based chemists chain Trihealth. This second part featured interviews with Trihealth’s co-founder and director Mark Addison, Lawrence Tomlinson, founder and chairman of LNT Group “entrepreneur in residence” at the Department for Business Innovation and Skills (and author of the Tomlinson Report), and business secretary Vince Cable. There is also an excerpt from Kennedy’s earlier interview with RBS chief executive Ross McEwan. In the Channel 4 News interview Tomlinson said:-

“The [bank’s] behaviour is disgusting and needs sorting out”.

In the second half of the Channel 4 News report, the presenter Jon Snow said to studio guest Jesse Norman, MP “one is tempted to ask: if the state can’t keep a bank straight who on Earth can?” Norman, the Conservative MP for Hereford and South Herefordshire and a member of the Treasury Select Committee, admitted that the inboxes of all 650 of the UK’s MPs have, for the past four years, been filling up with emails from directors and shareholders of small and medium-sized enterprises, complaining about RBS. He also questioned how much RBS’s senior management knew and when they knew it. He deflected a question about the absence of joined up thinking in government, and the conflicting objectives of the Treasury and BIS.

The Tomlinson Report has since come in for a lot of flak and a smear campaign from certain quarters, including George Osborne’s Treasury. It has been sickening to watch some politicians and journalists parroting the line of RBS chairman Sir Philip Hampton that it is “anecdotal” (it is actually based on some 400 case studies, interviews with ex bank advisers and professional advisers), and others claiming the report cannot be relied upon because Tomlinson’s company has its own grievance against RBS, and that he deleted references to other banks.

But as Tomlinson has explained, his business was never transferred to GRG. He also fully disclosed the nature of his own dispute with the bank  two months before the report was published and made clear he was unhappy with two (unnamed) UK banks days after being appointed as “entrepreneur in residence” by Vince Cable in April 2013. Someone like Tomlinson, who is actually running a successful UK business and has daily dealings with banks, is perhaps more likely to understand the banking issues that SMEs are facing than some detached City grandee.

I know from my experience as a journalist since 2010, and the hundreds of UK SMEs who have been in touch with me since about May 2011, that the Tomlinson report accurately reflects the behaviour of Royal Bank of Scotland, National Westminster Bank and other divisions of RBS including global restructuring group and West Register. Yes, unfortunately, the bank is “purposefully distressing” its SME and mid-corporate borrowers, bullying their directors, and engineering defaults — before siphoning out vast sums in fees and extra charges once their accounts have been transferred to global restructuring group, which is essentially a “slaughter house” and a “butchery” masquerading as a “hospital intensive care unit”.

After a spell in GRG, the bank will generally seek to profit from its victims’ demise. The abuses — described by some as “systemic institutionalised fraud” — would be impossible without collusion and complicity of “respected” firms of professional advisers — notably chartered surveyors (who seem only too happy to provide fantasy valuations that suit the bank’s purposes) and insolvency practitioners (who seem only too happy to skew administrations in ways that suit the bank).

That can include ensuring that RBS’s property arm West Register is able to cherry pick the commercial property assets of business borrowers the bank has helped to destroy at knockdown prices, even where higher offers are tabled for example by the properties’ legitimate owners (and I accept that, in some instances, the borrowers were beyond redemption, but even in such instances, the manner in which RBS goes about things seems wholly unjustified). You can probably imagine how the shareholders and directors of SMEs feel when they realise that an institution which they believed to be a trusted business partner turns out to be hell-bent on their destruction.

Despite all the political and media attempts to rubbish Tomlinson, to shoot the messenger, I hope that his report will mark a turning point for the bank. At least it has galvanised three separate inquiries into the bank’s treatment of business borrowers.

The first, by the heavily conflicted law firm Clifford Chance, commissioned by the bank, can clearly be discounted. The other two, a section 166 “skilled person’s report” for the Financial Conduct Authority and a Serious Fraud Office investigation are more likely to get to the bottom of this scandal and to persuade this most dysfunctional of banks to mend its ways. But I am not holding my breath.

Here are my other blogs are articles on the the Tomlinson Report.

  1. The “financial terrorism” of Royal Bank of Scotland blog published 27 November, 2013
  2. Bank Robbery? Sunday Herald, business focus, published 1 December, 2013

Short URL: http://www.ianfraser.org/?p=10066

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2 Comments for “Snow: ‘If RBS bosses didn’t know what was going on, they should be fired and prosecuted’”

  1. Another brilliant blog Ian with some illuminating comments by Jesse Norman MP to Jon Snow re the Lawrence Tomlinson report / allegations about RBS/GRG. Frustratingly, sub judice means I cannot comment on the similar treatment of SMEs by another Bank but, looking at the overall picture, I think Jesse Norman did hit the nail right on the head in this interview – although whether he meant to or was just deflecting criticism away from UKFI, I don’t know.

    Mr Norman made the obvious point that the GRG division of RBS must have been reporting to senior management somewhere along the line. And he said:

    “The question is how much they [senior management] know and when did they know it.”

    That is, surely, the million dollar question about everything that has gone so catastrophically wrong in our banks? Extraordinarily, it’s also the question the FCA (formerly FSA) seem absolutely determined not to answer. Our Regulator would have us believe that every immoral, antisocial or even criminal act or policy operated by the Banks including PPI, IRSA, Money Laundering for drug cartels, the deliberate destruction of SMEs and, most recently (although well known about for some time) the terrifyingly Machiavellian incentive schemes, all happened with no knowledge or authorisation from senior management. Therefore no individual, senior banker need be prosecuted or even investigated for what was, without doubt, the deliberate destabilisation of the entire economy for the benefit of … who? Well who did benefit? Call me cynical but the only people who appear to have benefited directly and hugely, are the senior bankers with their telephone number based pay and bonuses – and, if it carries on like this, you’d have to be using International telephone numbers to get enough digits.

    Listening to Jesse Norman’s comments to Jon Snow, it seems our Government is finally outraged by the conduct of a Bank thanks to Mr Tomlinson’s report. And that’s great, although the effectiveness of Clifford Chance, SFO or the FCA to do anything other than whitewash this, is yet to be seen. I just hope Vince Cable and Jesse Norman will keep pushing for serious action to be taken because the scale of the problem and its effects, if not stopped, risks making us a third world country – if not financially (because we can still use the City of London to portray an image that doesn’t actually exist anywhere outside of the M25), then certainly reputationally.

    At the beginning of 2013 there were a reported 4.9 million SMEs in Britain employing 24.3 million people and the combined turnover of these small to medium sized businesses was £3,300 billion. That is not a figure the Government should ignore. Neither should the FCA ignore it when they consider ‘market confidence’ above all other principles in FSMA 2000. And the only way I can see to protect SMEs, which represent 99.9% of all private sector business, is to tackle Jesse Norman’s excellent question:

    “…..how much they [senior management] know and when did they know it.”

    If they knew and were fully complicit in such innocuous business models as GRG, then surely they should, at the very least, lose their jobs? If, as senior management, they didn’t know what was going on in their Bank, then clearly they were not doing their jobs competently and should also go. Almost every day now a new banking scandal is uncovered and we are fast getting to the point where the lack of any appropriate action against bankers is lulling the entire population into a misguided acceptance that bankers genuinely are above the law – because that is how it appears. Actually, bankers are not above the law because, if they were, then we would have to consider when Britain stopped being a Democracy? And that’s a question no one wants to consider.

  2. Totally agree Spandavia. To me it is highly improbable that at least some of the senior executives at RBS were unaware of the GRG model and modus operandi… In fact in researching my book it became clear that, while they did not want to talk about it in detail they were aware of the scope for reputational harm…

    And it’s also worth pointing out that the model predates even Fred Goodwin, having been initiated by Royal Bank of Scotland before it acquired NatWest in March 2000.

    However I would point out that Jesse Norman is not technically in government. He’s a backbencher. The tenor of the response from the City Minister Sajid Javid has, in my view, been much less encouraging.

    [comment edited 8.1.2014]

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