Investors in RBS have become alarmed by payments made between two separate action groups claiming to represent shareholders and customers wronged by the bailed-out banking giant.
The RBoS Shareholders Action Group company (AGC) was set up during the financial crisis to bring together RBS shareholders who claimed the bank hid the true state of its finances when it asked them to subscribe to its rights issue in 2008.
In June 2017 the claimants scored a landmark victory when RBS agreed to pay out approximately £200m to avoid a public court battle that would have put disgraced former chief executive Fred Goodwin in the dock.
However, thousands of claimants will not receive their full compensation until millions of pounds worth of liabilities racked up by the AGC are bottomed out.
Earlier this year the High Court heard from lawyers acting for the claimants that fraudster Gerard Walsh was the “prime mover” behind the AGC.
It heard that Walsh is claiming £3.75m from the settlement on top of £80 per hour in consultancy fees that he has charged for his work on the case since March 2009 – despite the fact he was described to Signature Litigation, the law firm acting for the claimants, as a “volunteer who did not expect financial reward”.
However a letter sent by Signature to the claimants states: “We have identified that significant sums have been paid … to entities connected to Mr Walsh for apparent rental costs.”
Walsh has been branded a “fraudster” by a civil court in Jersey, and was found by an Irish court in the late 1990s to have “fraudulently misrepresented himself” by posing as a Lamborghini dealer.
Now City A.M. can also reveal that the AGC has transferred sums of money to a separate action group which is mulling legal action against RBS in Scotland over the mistreatment of business customers by the bank’s former GRG unit; the same Signature letter to claimants states “significant sums” have also been paid to the RBS GRG Business Action Group.
A spokesperson for the GRG management committee said: “Any sums received by this group have been repaid with interest, as of today’s date [22 August] there is no amount outstanding.”
It added: “The groups from time to time used common platforms in order to save costs in the interest of members, this was fully disclosed.”
A spokesperson for Signature Litigation said: “We confirm that we have seen evidence of substantial lending by the RBoS Shareholders Action Group Company to the GRG Action Group, which the Action Group Company had no authority from claimants to carry out. We have yet to be satisfied that the money was all repaid. We confirm that we were unaware of this at any time and that the claimants themselves were never informed.”
One source told City A.M. that Walsh had been involved in recruiting claimants and workers for the GRG action group, which was set up in 2013. “His hand is on the tiller,” the source added.
However, a spokesperson for the GRG management committee told City A.M.: “Gerard Walsh or any entity associated with him has never received any payment from this group.”
Former RBS employee and claimant Barry Middleton, who had “six figures” worth of shares before the financial crash, said he was “furious” that the AGC had offered a loan to the GRG action group, which he said was made without his consent or knowledge.
“It goes from bad to worse,” he said. “We’ve all contributed heavily into the AGC in the nine years they’ve been active and we’ve never been given any documentation on expenditure of their finances. We’ve been paying in blind on the basis of trust.
“The fact they have made contributions to the GRG action group beggars belief.”
In May this year the GRG action group told the Mail on Sunday that Walsh’s involvement in the group was “genuinely voluntary” and that he had made it clear he would not be involved in the day-to-day running of the group. The Mail on Sunday has been investigating Walsh’s business activities and has called for the City of London Police to probe the RBS groups through its Action Fraud team.