Fred Goodwin has escaped being summoned to the high court to explain his actions during the 2008 financial crisis, after disgruntled shareholders finally reached a settlement with Royal Bank of Scotland.
In a high-profile and potentially explosive case, thousands of investors argued they were misled into buying the bank’s shares during the bank’s £12bn cash call in April 2008.
The case had been due to start on 22 May, with the former RBS boss due to give evidence on 8 June – the day of the general election. However, the case was adjourned to 7 June to allow a settlement to be reached.
The RBS shareholder action group has now accepted a settlement, removing the last major impediment to an out-of-court deal.
There was no immediate comment from RBS ahead of the court hearing on Wednesday, when Mr Justice Hildyard is due to be updated on the proceedings by Jonathan Nash, QC for the shareholders.
But a spokesman for the shareholder action group said: “The directors met last night to consider the legal advice. They’ve accepted that advice and the matter will not now proceed to trial.”
Members of the action group were told last week that there were “practical and legal risks which had to be considered” in agreeing a settlement at 82p – less than the price they had aimed for but double previous settlements.
The case focused on losses incurred by investors when the bank was bailed out just six months after its cash call. The investors argued that RBS, Goodwin and three other former directors misled them about the financial health of the bank during the cash-raising exercise.
The investors claimed £520m, the value of their lost investment, together with interest, which took their total claim to £800m. They were the last group of investors to hold out against a deal with the bank. In December, RBS announced it had £800m to share among the different groups. About 87% of investors had settled before these court proceedings were scheduled.
A settlement has now been agreed, even though one group of “diehard” investors continues to hold out against a deal, partly because they wanted more money and also because some were determined to see Goodwin in court. Last week they met the RBS chief executive, Ross McEwan, in an effort to persuade him to increase the offer, which was already double the previous settlements.
Neil Mitchell, a businessman involved in a separate business legal suit against RBS, said he had met funders in the Lanesborough Hotel in London on Monday evening in an attempt to secure the millions of pounds needed to keep the case alive. He said: “It’s really odd, why have the group accepted?”
New funding is needed after Trevor Hemmings, the football club owner and businessman who had previously been funding the case, accepted the offer.
Goodwin has kept a low profile since leaving RBS at the time of its taxpayer bailout in October 2008. His last public appearance was before the Treasury select committee in February 2009. At the time he had offered the MPs his “profound and unqualified apology for all of the distress that has been caused”. He was later stripped of his knighthood and eventually agreed to having his pension reduced.
This article was written by Jill Treanor, for theguardian.com on Tuesday 6th June 2017 12.50 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010