Jan. 24 (Bloomberg) -- A report on Royal Bank of Scotland Group Plc’s near-collapse was changed to remove a section that said Fred Goodwin, the lender’s former chief executive officer, “lacked the experience to run an international bank.”
The findings in the Financial Services Authority report were altered when Goodwin’s lawyers were allowed to see the document, Bill Knight, a lawyer who conducted an independent review of the document, told a U.K. Parliament committee today. Knight said the change during the so-called “Maxwellization process” was fair.
“The suggestion was that he lacked the experience to run an international bank,” Knight told the U.K. Treasury Select Committee. “There was no evidence of a lack of competence.”
The FSA released the report into RBS’s finances in December after the regulator was criticized by lawmakers for clearing Goodwin and other officials of wrongdoing. Lawmakers said they deserved a greater explanation of the circumstances that led to RBS getting a 45.5 billion-pound ($70.9 billion) rescue by taxpayers following the lender’s acquisition of ABN Amro Holding and the 2008 financial crisis.
David Walker, the former chairman of Morgan Stanley International who along with Knight conducted the independent review of the FSA report at the request of the committee, said that Goodwin did a poor job delegating authority and didn’t always give the bank’s board “adequate risk information.”
Neither Knight nor Walker would be drawn in on questions from the committee about whether the FSA report raised serious enough concerns to strip Goodwin of his knighthood. U.K. Prime Minister David Cameron said last week that it should be reviewed.
A spokesman for Goodwin wasn’t immediately available to comment when contacted by Bloomberg News. Liam Parker, an FSA spokesman, and Michael Strachan, an RBS spokesman, declined to comment.