RBS boss withheld information from MPs about criminal investigation, Treasury Committee says

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MPs have accused RBS chief executive Ross McEwan of withholding information from the Commons Treasury Committee about a police investigation into a former employee of the bank’s infamous Global Restructuring Group (GRG).

Committee chair Nicky Morgan said in a letter to Mr McEwan that his explanation for not disclosing knowledge of the criminal investigation was unconvincing and fit a “pattern of defensiveness” in the bank’s handling of the GRG scandal.

Regulators found that RBS’s restructuring unit, which was supposed to help businesses in difficulty was guilty of widespread inappropriate treatment resulting in “material financial distress”.

Asked by the committee in January if he was aware of any allegations of criminal activity within the bank, Mr McEwan said: “Not that we have seen or had reported, and certainly none that the police of Serious Fraud Office are looking at, to our knowledge.”

But it later emerged that RBS was made aware in July 2017 of potentially criminal conduct by a former GRG employee which police in Scotland subsequently began investigating.

Following an article in The Times in June this year, Mr McEwan wrote to the Treasury Committee to explain why he had not mentioned the investigation when questioned.

“In relation to that article we would entirely reject the suggestion that the committee may have been in any way misled by the evidence that I gave during my appearance before you in January,” the RBS boss wrote.

He added that the investigation was not in relation to the issues at GRG being considered by the FCA and the committee.

In response, Ms Morgan said she was unconvinced by that explanation. 

The committee “expects clarity and openness from witnesses, and Mr McEwan’s evidence fell short of that standard”, Ms Morgan said.

“More generally, the committee is concerned by the pattern of defensiveness, and a failure to acknowledge mistakes, demonstrated by RBS throughout its handling of the GRG affair. 

“Mr McEwan’s letter to me is an example of this, and it casts doubt on his assurances that RBS’s culture has changed fundamentally since he took up his position five years ago.

“If the committee decides to ask Mr McEwan to provide further oral evidence, it will expect him to tell the whole truth, not an edited version to suit him.”

In July, the FCA confirmed that it has no power to take action against RBS senior managers over GRG’s treatment of small firms.

The City watchdog last year launched an investigation into the unit, which operated between 2005 and 2013, after allegations firms had been pushed into bankruptcy so RBS could buy up assets cheaply to boost its own profits.

In an update to the investigation in July, Andrew Bailey, the FCA’s chief executive said he had only “very limited” powers to take action because many of GRG’s activities were not regulated.

Mr Bailey said: “Taking action was therefore always going to be difficult and challenging but after carefully considering all the evidence we have concluded that our powers to discipline for misconduct do not apply and that an action in relation to senior management for lack of fitness and propriety would not have reasonable prospects of success.”

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