Lawyers acting for businesses affected by Royal Bank of Scotland’s turnaround division have demanded that the bank preserve “critical evidence” before a planned group legal action.
Quinn Emanuel, an American law firm, has written to RBS highlighting concerns that a decision to close the global restructuring group (GRG) could lead to key evidence being lost.
The firm represents a Business Action Group which is made up of shareholders and affected directors who say GRG’s activities led to the failure of otherwise viable companies.
They say that the bank charged excessive fees, deliberately causing customers to default and undervalued their assets before buying them through the bank’s own property division, West Register.
Revenue & Customs is understood to be looking into related concerns that banks and other finance companies told struggling customers to delay paying their taxes. When some of these businesses went bankrupt the taxman — as an unsecured creditor — lost out. The Revenue lost £4.4 billion in 2012-13 because of insolvencies, figures show.
RBS denies the allegations. It is closing down the division, arguing that an improving economy reduces the need for restructuring. Key staff have left, some for other restructuring units.
Quinn Emanuel has requested that the bank preserve physical and electronic records and stops destroying documents or computer hard drives. It fears evidence could be “inadvertently or deliberately” destroyed.
It has also asked the bank to notify GRG suppliers as well as present and former employees of the planned legal action so that they can also keep evidence.
The “litigate hold” letter highlights potential court sanctions related to the risk of destruction of evidence during the pre-legal action process, although there is no suggestion that RBS has done so.
RBS restructuring has been under intense scrutiny since Lawrence Tomlinson, a former government adviser, published a report last year that criticised the division’s conduct. The Financial Conduct Authority is carrying out an inquiry.
The Action Group said it had 200 “viable” claims of wrongdoing and planned legal action before the end of the year. With hundreds more cases being analysed, a spokeswoman said the group expected action on behalf of about 600 businesses.
It had appointed the London-based Clyde & Co to help it to compile a group litigation, but the law firm stepped down after some of its insurance clients who work with RBS highlighted a potential conflict of interest.
RBS declined to comment yesterday on the move.