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Thursday, December 15, 2011

BIS To Prosecute Sir Fred Goodwin?

Not everyone is as content and as passive as the Financial Services Authority (FSA) when it comes to the RBS debacle and the stewardship of Fred "the Shred" Goodwin and other members of the board.

The Telegraph reports that the head of the Insolvency Service at the Department for Business Innovation and Skills (BIS), which is already investigating whether RBS's former directors could face civil charges, has asked his legal team to check the criminal allegations too.

The FSA report report into the collapse of RBS noted that:
 
"RBS appeared uncertain of its capital position at critical times.
 
So, at best, compliance was only established on a retrospective basis."
 
In theory this is a breach of the Companies Act, which states that directors must be able to "disclose [their company's] financial position with reasonable accuracy at any time".
The website of BIS says it "often" prosecutes "malpractice by company directors in relation to the keeping and preservation of company accounting records".

Penalties are "punishable by a maximum penalty of 2-10 years imprisonment and/or a fine."

How embarrassing for the FSA, if BIS launches a criminal prosecution.

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