The Royal Bank of Scotland's annual general meeting was once a genteel affair frequented by ladies from Morningside. But it is becoming more and more bizarre with each passing year and the surrealistic nature of the event has intensified since the Edinburgh-based institution was bailed out with £45.5 billion of taxpayers' money.
The event has instead become a magnet for protest groups, some in fancy dress, who want to highlight alleged wrongdoing by the bank. Some, like Platform London, came to highlight RBS's continued backing for environmentally destructive industries such as Canadian tar sands. Others like Move Your Money focus on the bank's wider social and environmental irresponsibility, seeking to persuade customers to transfer their business to more ethical players.
Then there's Bully-Banks which wants to highlight what it believes to be an epidemic of 'misselling' complex derivative products including interest-rate swaps to small and medium sized enterprises. And there are mavericks like Kit Fraser, of Ban Bankers' Bonuses Party fame, who last year took his kit off by the conference centre's doors in the hope of getting elected as an MSP (he wasn't). Most would agree there are at least some parallels between RBS and the Bank of America, which Rolling Stone journalist Matt Taibbi recently characterised as "a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time."
However the protestors outside the meeting were a sideshow compared to what was being said inside the Gogarburn auditorium, itself a monument to the hubris of RBS's past chief executive Fred Goodwin, last Wednesday (May 30).
About three quarters of the way through the event, shareholder Neil Mitchell, a former chief executive of listed software group Torex Retail, took to the floor to accuse the bank of "systemic institutionalised fraud" inside its multi-billion "distressed assets" or "special situations" division. The so-called Global Restructuring Group (GRG) also includes West Register, property sub-division, the UK's largest commercial landlord with £100 billion of commercial property assets and which is also reportedly being probed by the FSA.
Mitchell accused the RBS board - some of whom were visibly squirming in their seats in as he spoke - of turning a blind eye to, and even sanctioning, a rash of "corporate governance infringements, regulatory breaches and systemic institutionalised fraud" inside the division.
Mitchell said that the alleged malpractice, which included conspiring to defraud corporate customers, had been signed off at the highest level in RBS and he alleged it had been aided and abetted by the 'Big Four' accountancy firm KPMG. He said the bank had refused to either to meet him or to take receipt of "crates and crates of evidence" detailing the alleged crime wave.
He also expressed surprise it had even refused to go through an initial "black file" summarising the cases that Mitchell and others have investigated - copies of which are also held by government ministers including business secretary Vince Cable and lord chancellor Ken Clarke.
The former Torex Retail chief executive, who claimed he had been forced to take out a 'cease and desist order' to prevent RBS from using electronic and physical surveillance to monitor his every move told the RBS board he was dismayed -- as, of course, are many others -- by its point blank refusal to investigate genuine complaints that are levelled against it.
RBS's preferred method in such instances and I can assure you there are many, is to deny, dilute, delay. Rather than engaging with business and corporate customers with grievances, the profit-hungry bank appears to have a preference for encouraging them to sue.
That way, complaints become sub judice and buried in the convenient quagmire of the UK's judicial system, where the bank has a clear upper hand owing to its superior legal firepower and the size of its legal panels (which are so extensive that plaintiffs frequently struggle to obtain representation). Getting such cases into the courts has the added advantage, from RBS's perspective, of sometimes bankrupting its enemies - and therefore silencing them. (An amateur video of Mitchell's intervention is available here)
What surprised me the most was not Mitchell's claims themselves. After all, I have heard from scores of owner/managers of UK businesses who allege that the bank 'shafted' them and destroyed their livelihoods, by arbitrarily shortening payback periods and amending the terms and conditions on loan agreements without notice. I have also written about how the Scottish entrepreneurs Derek Carlyle and Nigel Matheson, managed to win courtroom battles with the bank after it wilfully destroyed their firms and livelihoods.
No, what surprised me was that none of the serried rows of financial journalists at the annual general meeting took the slightest bit of interest in what Mitchell had to say. None of them mentioned anything he had said in their extensive AGM coverage the next day. This I find puzzling. If, as claimed by Mitchell, one of the UK's largest banks is systematically defrauding its own customers in order to inflate its profitability, one might have thought it vaguely newsworthy?
Oh and, for the record, RBS chairman Sir Philip Hampton did suggest the bank might now take a look at Mitchell's allegations.Suggest a correction