Goodwin Helps Rack Up £400,000 RBS Legal Bill
Royal Bank of Scotland (RBS) has spent hundreds of thousands of pounds on law firms acting for Fred Goodwin and other former directors during the early stages of legal actions brought by thousands of its shareholders.
Sky News has learnt that the bank has already spent well over £400,000 on separate legal advisers to represent a quartet of RBS's ex-bosses including Mr Goodwin and Sir Tom McKillop, its former chairman.
The bill is being footed by the bank - which effectively means that RBS is being subsidised by taxpayers to fight the case of the bosses who led it into the biggest British state bail-out in history.
The £400,000-plus figure emerged during a case management conference held as part of pre-trial preparations last week, according to people familiar with the situation.
It is common practice for companies to pay the legal fees for current and former directors in legal cases of this nature, although the nature and scale of RBS's rescue may reignite public anger over the issue.
Legal sources say that the £400,000-plus spent representing Mr Goodwin and other former directors to date will look modest in the context of their eventual bill if a trial runs - as is predicted - for many months.
A trial date has yet to be set although insiders say that it could get underway next year.
RBS has previously estimated that it could spend as much as £42m in total on legal fees, a figure which includes separate representation for the director defendants.
Mr Goodwin and Sir Tom stepped down in the autumn of 2008 as Alastair Darling, the then Chancellor, insisted on their resignations as a condition of the bank's rescue.
Guy Whittaker, the former finance director, and Johnny Cameron, who ran RBS's investment banking arm, are also defendants in a number of the shareholder actions.
There are four main investor groups bringing claims against RBS, in which they allege that the bank misled them about the state of its finances when it raised £12bn from them in a rights issue in the spring of 2008.
Months later, RBS received an emergency £45.5bn capital injection from the Government as it teetered on the brink of outright collapse.
The claimants include the RBoS Shareholder Action Group, which comprises 38,600 claimants, including funds owned by fellow state-backed lender Lloyds Banking Group; another group which includes Aviva and Standard Life, the insurance companies; and a third which is acting for dozens of institutional investors.
RBS itself is being represented in the series of shareholder lawsuits by Herbert Smith Freehills, one of the City's leading firms.
In a statement, RBS said: "While RBS and its former directors made some business decisions that have been criticised, this does not mean that they misled investors or acted illegally.
"We believe we have strong defences to the claims that are being brought against the bank and that is why we intend to defend these vigorously and to protect the interests of our shareholders including UK taxpayers."
It declined to comment separately on the cost of legal advice for Mr Goodwin and other former directors.