Tuesday, 26 May 2009

Reading-Based Banker At Fault Over Credit Crunch

In a major investigation by BBC Radio 4 programme File On 4, the conduct of Reading-based HBOS executive Lynden Scourfield has been called into question.

Irregular activities alleged to have occurred within the company's Queen's Road offices include requirements to hire dependent consultant Quayside Corporate Services despite some unusual and excessive contract conditions.

Borrowers have argued that Quayside Corporate Services managing director David Mills was complicit in forcing the subsequent bankruptcy of their companies due to unfair terms of borrowing imposed on them by the creditors.

In one case Mr Mills gained a controlling interest over a company in which he oversaw a ballooning of agreed credit facilities from £1m to £28m while still receiving consultancy and management fees, but both Mr Mills and Lloyds Banking Group have denied responsibility for the failure of their clients.

Forensic accountant David Winch found 18 companies had received cash where there was a 'clear and obvious risk' as total losses accumulated out of the Reading branch reached more than £250m, or more than 90% of the total amounts provided in loans. Mr Winch described this lost sum as "quite shocking" and "remarkable in the extreme".

'Questions to be answered'

Conservative MP James Paice has secured a parliamentary debate on the alleged irregularies (for next Tuesday, June 2nd), while LibDem Treasury spokesman Vince Cable has been leading calls for a full investigation by the regulatory services.

Mr Paice commented that "The whole thing stinks" as he argued that the wider issue of public support for financial institutions must be called into question while such 'dubious' policies remain in place.

Mr Cable said, "If half of what I hear is true this is a very, very serious matter," and described the behaviour of HBoS executives as 'extremely irresponsible'. He added,
"We need to understand why. It's in the wider public interest and we need to know why there were failures of supervision, and why the bank's directors didn't do their job. There are a lot of questions to be answered."
Meanwhile financial journalist Ian Fraser charts the decline and near collapse of HBoS, asking 'when did the rot set in?', but leaving open the implication that despite the suspension and sacking of individuals in key positions (Lynden Scourfield was suspended by HBoS in 2006) the underlying conflict of interests which produced such massive miscalculations of risk have still not yet been fully sorted out.

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Update: Ian Fraser goes into greater depth on the fraud committed out of the Reading office.

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BBC Radio 4's 'File On 4' for Tuesday 26th May is available to stream for 7 days on the BBC iPlayer, or you can download the episode as a podcast.

2 comments:

  1. Here is a link to an additional article by Ian Fraser which looks very closely at the particular problems at the Reading Branch of HBOS:

    http://www.ianfraser.org/?p=856

    Leaving aside the individual cases of hardship involved in this particular case of bank fraud, Ian's article raises the more serious question of who is ever going to investigate this corruption so that the public is protected againts financial crime in high places? To date, the answer appears to be NO ONE.

    Nikki Turner

    ReplyDelete
  2. Thanks I've updated the main text - that is one serious piece of journalism by Ian Fraser.

    To think that people not only try to get away with things like that, but that they actually can for so long is enough to make my blood boil.

    ReplyDelete

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