FSA Report into RBS's `Train Crash' Should be Published, Oakeshott Says

The Liberal Democrat’s Treasury spokesman added to pressure on the Financial Services Authority to release a report on the bailout of Royal Bank of Scotland Group Plc, calling it the “worst company train crash in British history.”

Matthew Oakeshott, a party spokesman in the House of Lords, said the public had the right to know more about the 2008 RBS bailout. Liberal Democrat Business Secretary Vince Cable asked the FSA to release the report earlier this week.

The FSA cleared RBS and former executives including ex- Chief Executive Officer Fred Goodwin in the Dec. 2 report, which faulted the bank for “a series of bad decisions” before the financial crisis. The FSA said it wouldn’t take any action or publish the contents of the review.

“When you’ve had the worst company train crash in British history which killed tens of thousands of businesses and hundreds of thousands of jobs we need to go into what went wrong,” Oakeshott told BBC Radio 4’s Today show. “I’m sure the FSA’s lawyers can get to work, can take out the sensitive parts and can give us all the substance of their report.”

45.5 Billion-Pound Bailout

Edinburgh-based RBS posted the biggest loss in corporate history in 2008 and required a bailout of 45.5 billion pounds ($72 billion) following its acquisition of ABN Amro Holding NV. The FSA was probing the 2007 takeover, conduct by RBS executives and a 2008 rights offering. The regulator said in March 2009 it would examine senior managers of banks that collapsed or accepted government money.

Cable, in a letter to Adair Turner, chairman of the FSA, urged him to publish the confidential report into whether the lender’s former executive broke regulatory rules in the run-up to the 2008 bailout. In the letter, released yesterday, Cable said he was “disappointed” the findings weren’t public.

Turner defended the decision in an article on the FSA’s website yesterday and said the criticism isn’t valid and investigations are “subject to confidentiality.”

‘Little’ to Add

A report “looking just at the RBS story” would “likely add little to our understanding of the key causes of the crisis and of the crucial measures required to prevent repetition,” Turner said. “It would reveal the same deficiencies of regulatory philosophy already identified, under which the FSA simply did not believe its remit included preventing the ABN Amro acquisition.”

An FSA spokesman, Christopher Hamilton, said the regulator wouldn’t comment beyond Turner’s article.

The results of the investigation were also met with skepticism by some lawyers and unions.

Unite, Britain’s largest trade union, said last week the FSA “has demonstrated its weakness and inability to hold the sector to account” and called the conclusion “an outrage.”

The report “appears to have been conducted” by the FSA’s supervisory division rather than its enforcement unit, said Harvey Dyson, a lawyer at Stephenson Harwood in London.

“It’s not clear what documents or who the investigators had access to,” Dyson said. “The FSA has limited powers to demand documents and attendance at interviews through its supervision division and it doesn’t strike me as a thorough job.”

To contact the reporters on this story: Thomas Penny in London at tpenny@bloomberg.net; Lindsay Fortado in London at lfortado@bloomberg.net.

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net; Anthony Aarons at aaarons@bloomberg.net.

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