Sir Fred Goodwin may face criminal charges after the FSA’s report into the near collapse of Royal Bank of Scotland suggested that the bank’s directors broke UK accountancy laws.
Despite highlighting a number of failings in the report, FSA chairman Lord Turner said yesterday that there was not enough “sufficient evidence” to punish the RBS directors under the FSA’s rules. However, a breach of the UK Companies Act may allow Business Secretary Vince Cable the opportunity to press charges, according to reports.
The Companies Act says directors must be able to “disclose their company’s financial position with reasonable accuracy at any time. They must also ensure “adequate record is made and retained… of any expected loss, liability, contingency material to the assessment of the current position.”
On Monday, Cable said he was investigating whether any action can be taken against any Royal Bank of Scotland directors who were at the bank in the run up to its near collapse in 2008.
According to The Telegraph, The FSA’s report highlighted a number of failings which suggested RBS directors may have breached these rules.
The FSA report says the Review Team remained unclear about when a final capital position for end-Q1 2008 was settled by the firm.
It says: “The then RBS group finance director told the Review Team that balance sheet data were not available until three weeks after the month-end.”
“So, at best, compliance was only established on a retrospective basis. This undermined the ability of the firm to demonstrate compliance with regulatory … requirements. This was an especially serious failing for a firm which had chosen to operate with limited capital headroom, giving it a very low margin for error.”
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