Small Business Lawsuit Against RBS’s Restructuring Unit Begins

Royal Bank of Scotland

A trial has begun against the financial institution Royal Bank of Scotland (RBS) brought by a small business owner and former RBS client suing the bank for damages related to RBS’s disgraced Global Restructuring Group (GRG).

Bloomberg reported Tuesday (Oct. 29) that emails sent between RBS executives revealed at the trial’s opening on Monday were used to paint a picture of RBS executives that had “lost their moral compass,” as Hugh Sims, the lawyer for Oliver Morley, told the court.

Morley is suing the bank over a 2006 agreement with the bank to repay a $97 million loan, accusing the FI of unlawful mistreatment of his business, a property development firm. The allegations include claims that the U.K. government’s treasury guided RBS to make threats against Morley and pressure him to transfer assets to the GRG subsidiary, with RBS allegedly warning him that “it would use a pre-packaged sale to the subsidiary if Morley didn’t agree to the deal,” Bloomberg reported.

“Morley was pushed into submission for reason of lack of any alternatives,” Sims said at the start of the trial. The suit claims Morley’s business lost millions of dollars in income and capital gains because GRG allegedly forced the breakup of his company’s assets.

RBS has denied the allegations and says it acted lawfully, according to reports.

One of the emails highlighted at the trial’s opening included a 2009 message sent to RBS GRG manager Toni Smith with plans for a meeting to discuss Morley’s case, which included a “room booking for the Morley massacre.”

In another email, Smith sent to Joss Brushfield, a director in RBS’s real estate asset management business, stating that if Morley disagreed with the deal “then it’s his head on a spike.”

The emails present only the latest piece of insight in a years-long saga that has seen U.K. government investigations and reports that concluded GRG mistreated small businesses and, in some cases, unfairly forced them into administration. The case has not only garnered criticism against RBS, but also against regulators, with the U.K. Financial Conduct Authority last year deciding not to take action against RBS despite finding evidence of wrongdoing.

The BBC reported earlier this year that the U.K. Treasury’s Asset Protection Agency had allegedly influenced RBS’s GRG strategy.