The UK’s financial watchdog is looking into allegations that non-executive directors at the Royal Bank of Scotland were pressured not to raise concerns about the troubled state of the bank’s finances.
A spokesman for the Financial Services Authority confirmed to CNN that it was examining issues raised in a letter from a Labour politician and former government minister, Lord Foulkes. Lord Foulkes said Sunday that an investigation was needed to determine “whether there have been any offences committed and what action might be appropriate,” according to the UK’s Press Association. One of the concerns raised in the letter was whether non-executive directors “might have been told that their position would be jeopardized if they continued to ask awkward questions.” He also said he shared the “concerns of many people that unlike in America we don’t seem so far to have considered if any criminal action has taken place.”
RBS posts record $34 billion loss
In a statement Monday, RBS said it had been unaware of Lord Foulkes’ letter until details of it were published in Sunday’s Observer newspaper. “We are not aware of any evidence to support such a claim and it is not an issue that has been raised by any non-executive director past or present with the company or indeed with the FSA who are in regular dialogue with the Board and its members,” the bank said. “If Lord Foulkes has any evidence to support the assertion it would be in the interests of all parties if he shared it.” RBS has been the subject of close scrutiny since it was bailed out and partially nationalized by the UK government last October because of its exposure to toxic assets. Last month the bank announced an annual loss of $34 billion — the worst results in British corporate history. Former chief executive Fred Godwin has also been heavily criticized for accepting an annual pension worth $933,000 since quitting the bank after the government bailout.