The Sunday Times
Michael Glackin Published: 26 July 2015
CEO Fred Goodwin and RBS are being sued by the former shareholders
ADVISERS to Royal Bank of Scotland (RBS) during its ill-fated multibillion-pound cash call in 2008, including US financial giant Goldman Sachs, have been accused of delaying a £5bn court case by lawyers representing shareholders.
Goldman Sachs has so far failed to hand over key correspondence it had with RBS in the run up to the Edinburgh bank’s £12bn rights issue that took place just before the bank’s near-collapse and its £45bn bailout by taxpayers.
RBS faces a crucial hearing in the High Court in London on Tuesday amid increased delays and wrangling over the disclosure of emails by a number of so-called “third-party groups” who had a role in the controversial rights issue.
The delay has forced the judge hearing the case, Robert Hildyard, to extend the deadline for disclosure of documents by a further month, to August 10.
RBS and its former directors, including the erstwhile chief executive Fred Goodwin, are being sued by former shareholders, including key City institutions, who claim they were misled into investing in the rights issue.
They claim RBS failed to disclose the rotten state of its finances to investors, who later saw the value of their shareholding collapse.
RBS denies the claims.
Lawyers representing shareholders said Goldman Sachs, which is not a party in the court case but was one of the underwriters of the controversial share issue, has still not handed over a tranche of documents that they believe are critical to proving their case.
Leon Kaye, senior partner with Leon Kaye solicitors, which is acting for about 4,000 small shareholders and some City institutions, said: “Most of the disclosure issues are resolved, but some are lingering, which is why the deadline for disclosures was extended.”
Navid Hakimmaani of Leon Kaye said: “Some Royal Bank advisers, such as Goldman Sachs and some other third parties, have some issues about disclosing some documents they have in their possession. We’re confident this will be resolved, but we have had no disclosure from Goldman Sachs yet.” Goldman Sachs declined to comment.
The revelation comes after Justice Hildyard criticised David Blayney QC, a lawyer for the defendants, for trying to stall the case during a case management hearing at the High Court in March.
It is understood one of the other third parties that has had issues about disclosure was Deloitte, Royal Bank’s auditor at the time of the share issue. Deloitte declined to comment.
An insider said: “Some groups do not want to hand over documents if they can avoid doing so. We believe these documents are crucial and will tell us what the bank knew and more importantly what third-party advisers were telling the bank at the time of the rights issue. The delay is frustrating to say the least.”
The disclosure work will “substantially increase” the £42m of taxpayers’ money earmarked by the courts for RBS’s defence.