Vince Cable backs independence of Tomlinson report on RBS

Vince Cable At Cass

Vince Cable has been forced to defend a report drawn up by one his advisers which accuses Royal Bank of Scotland of deliberately forcing viable businesses to the brink to make profits for the bailed-out bank.

The business secretary was questioned by his shadow, Chuka Ummuna, about the independence of the report which RBS has said is damaging its reputation with small business customers.

Ummuna asked Cable in the Commons how the report by Lawrence Tomlinson, appointed as entrepreneur in residence at the business department, could be independent if its author was in dispute with RBS.

Cable insisted that he was aware of Tomlinson's dispute with RBS, which is one of a number of lenders to the Yorkshire businessman's group of companies, ranging from care homes to a car-maker.

"He has performed a useful service in putting it out there," said Cable, who has referred the report by Tomlinson to the City regulator, the Financial Conduct Authority.

The FCA has ordered RBS to conduct an independent inquiry into the allegations, which is in addition to an investigation that RBS has commissioned from Clifford Chance into the comments made by Tomlinson.

In his 20-page executive summary, Tomlinson cites evidence from businesses which have approached him after ending up in RBS's global restructuring group (GRG), and subsequently had their properties sold to its specialist property arm, West Register.

In the report, Tomlinson writes: "From the cases I have heard, it is clear that a perception has arisen that the intention is to purposefully distress businesses to put them in GRG and subsequently take their assets for the West Register at a discounted price. This needs to be addressed and the conflict of interest removed."

GRG, run by veteran banker Derek Sach, is the operation the bank uses to try to turnaround companies. RBS has insisted that there is no evidence to support the allegations which it admits are damaging its reputation.

Powered by Guardian.co.ukThis article was written by Jill Treanor, for theguardian.com on Thursday 5th December 2013 11.45 Europe/London

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