It would appear that Royal Bank of Scotland has come under attack from all angles this week. First, chief executive Stephen Hester hit the headlines for admitting that even his own parents thought he was overpaid; now the notorious Enron fraud is casting its long shadow over the bank in a new court case.
It has been claimed in a report in the Times paper that RBS defrauded Austrian bank, Raiffeisen Zentralbank (RZB), by encouraging it to invest in a £140 million fraudulent financial vehicle, which was created for the failed energy giant Enron.
A court has heard that RZB ploughed £10 million into the vehicle, which was created in 2000 and set up by the very same department at RBS where the infamous “NatWest Three” bankers worked.
Although the NatWest Three – who served prison sentences both here and in the US after being found guilty of Enron-related fraud – were not involved in the deal with RZB, the Austrian bank maintains that RBS bankers purposefully falsified the loan documentation, in order to conceal a supposed secret arrangement between RBS and Enron.
A “private” side deal allegedly boosted the amount of money RBS would earn from Enron for the deal. Lawyers representing RZB said the deal had “no commercial purpose other than the significant benefits to Enron.”
A lawyer for RBS, Anthony Zacaroli, told the court that the allegations of dishonesty and fraud were “illogical, implausible and fiercely rejected.”
RBS has also said in a statement that it is “satisfied that all the relevant employees acted honestly and to the highest professional standards.”
The case continues.
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