Pressure grows on RBS as victims of restructuring scandal cry foul at “conflicted” advisors

By Ian Fraser

Published: Sunday Herald

Date: 30 August 2015

Rod Coffey

Rod Coffey

A former Aberdeen oil firm owner who accuses RBS of “stitching up” his business has criticised the bank for appointing the accountancy firm that handled his firm’s administration to review alleged wrongdoing by RBS’s global restructuring group (GRG).

Rod Coffey, former chief executive of Stable Holdings, which leased drilling equipment to the global oil and gas industry, said he was surprised to hear of the appointment of PriceWaterhouseCoopers earlier this month. Coffey, 49, told the Sunday Herald: “I felt a sense of déjà vu. It seems that, once again, they’re just teaming up with their buddies in order to condemn us”.

The alleged wrong-doing by GRG is also being investigated by the Financial Conduct Authority.

Stable Holdings made £3m profit on £28m turnover and had 120 employees in 2008, and reduced its borrowings with RBS from £9 million to £6.5 million in 2007-8. But the bank withdrew support and, after transferring the company to the GRG in June 2008, added additional fees and charges before appointing PWC as administrator on 3 August 2009.

Two months later, the bulk of Stable’s assets were sold to Netherlands-based Paradigm Oilfield Services for what Coffey claims was “a fraction of their worth”.

Coffey, who owned 81 per cent of Stable’s equity, was in April 2008 ranked as Scotland’s 87th wealthiest person in the Sunday Times Rich List, with a net worth of £60m. He has since emigrated to California.

He said: “This episode has completely changed my life. I was earning a great wage, and building a great business, and they took all of that away from me. I felt like I was being chased out of Aberdeen as a result of RBS and PwC’s actions.”

In a separate development, John Bamford of the RBS GRG Business Action Group, which represents the interests of 350 businesses that allege they were badly treated by the bank including Stable Holdings, wrote to RBS’s general counsel, John Collins, on 13 August requesting an urgent meeting to discuss the PWC appointment and asking for it to be “on hold” in view of what he said were “serious conflicts of interest”.

Bamford said that group members were concerned that PWC, together with two other firms recently appointed by the bank to review GRG cases – the law firms Dentons and CMS Cameron McKenna – could appear to be conflicted due to the volume and nature of work they have already undertaken for RBS.

PWC has handled some 40 administrations for GRG. Dentons represented RBS in more than 80 court cases brought by businesses that allege the bank missold them interest-rate swaps. And CMS last year acquired Scottish law firm Dundas & Wilson, which has handled scores of restructurings for RBS.

Abhishek Sachdev of Vedanta Hedging, which has advised businesses in court cases against RBS, said: “How can Dentons be expected to be fair and reasonable when, for the past four years, they have been vigorously defending the bank from customers who think the bank destroyed their businesses?”

RBS responded by letter on Thursday saying the three advisory firms have “the requisite expertise and experience and any conflicts have been carefully managed and avoided”. The bank also said the appointments were an “internal management issue and we do not wish to accept your offer of a meeting”.

The bank appointed the firms to prepare the bank internally for the FCA’s skilled person’s review, and to ensure it is prepared for actions it may have to take arising from that.

In 2013, the FCA launched a “section 166” probe into GRG affair, which was outsourced to the accountants Mazars and US-based Promontory Financial Group. City sources have said the report is expected to be “critical and quite damning of RBS” and that the regulator may ask the bank to establish a compensation scheme for effected firms.

A spokesman for the action group said the group will insist that any compensation scheme is transparent, fair and takes full account of the consequential losses which account for 90 per cent of the average claim, as well as the position of key stakeholders.

A bank spokesman said: “RBS continues to co-operate with the ongoing skilled person’s review. We have external advisers assisting us on this matter.” He declined to disclose how much the bank is paying PWC, Dentons and CMS, all three of which firms declined to comment.

An FCA spokesman said: “We continue to look into the allegations under a section 166 review and the report is expected by the end of year. We will not be giving any guidance during the process about what has been found.”

An earlier review RBS commissioned from lawyers Clifford Chance in the wake of the Tomlinson report of November 2013 found no evidence the bank “systematically” set out to defraud its own business borrowers.

An edited version of this article was published in the business section of the Sunday Herald on 30th August 2015

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