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RBS controversy casts shadow over Scottish vote

Chris Hamblin, Clearview Publishing, Editor, London, 16 September 2014

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On Thursday, Scotland will vote either in favour or against independence from 'rUK'. HM Treasury seems to have been taking a very close - and allegedly illegal - interest in the outcome.

On Thursday, Scotland will vote either in favour or against independence from 'rUK'; regulatory change is inevitable whichever way the vote goes.First, however, there is the matter of a little skulduggery from the very people whose job it is to promote clean markets.

 

As English politicians go on a last-ditch charm offensive north of the border, HM Treasury has enmeshed itself in a legal controversy by telling the British Broadcasting Corporation that the Royal Bank of Scotland was planning to relocate from Edinburgh to London in the event of a 'yes' vote for independence before this had actually become RBS board-approved policy. Critics say that this is an illegal disclosure of market-sensitive information born of political panic.

 

Alex Salmond, Scotland's first minister and a former economist at RBS, has accused the Treasury of using confidential insider information that it had obtained in the course of its duties to scare Scottish voters into rejecting independence. He looked forward to an "inevitable investigation," referring to RBS's proposal to register itself in England if Scotland votes for independence as "market-sensitive", and wanted the BBC to promise to co-operate.

 

Who said what

 

The Treasury has so far not told Compliance Matters whether it obtained the information on a confidential basis or a regulatory basis or merely a conversational basis, despite being asked. It has, however, shown CM a letter to Salmond from Cabinet Secretary Sir Jeremy Heywood, dated Friday 12 September, saying that the Treasury divulged the information “in response to...informed media reports about RBS...at a time when the UK financial markets were closed.” Salmond, according to the Guardian, has said that the disclosure of RBS's plans sent its shares down overnight on the Asian markets. RBS has told CM that it is listed only on three stock exchanges – London (LSE), NY (NYSE) and Amsterdam (Euronext).

 

A report that the bank was planning to re-domicile its holding company in the event of a 'yes' vote first appeared in the Sun newspaper around about 10pm on Tuesday 8th or Wednesday 9th (theTelegraph gives one date, Robert Peston of the BBC another), leaked from an unnamed Treasury source. Then, according to Heywood's letter, “Confirmation of the Treasury’s understanding of RBS’s contingency planning was issued by the Treasury press office...to all national media outlets...at 10.16pm.” The time presumably refers, although the letter does not say it, to the evening of Wednesday 9th.

 

RBS, for its part, seems reluctant to co-operate in any investigation: it toldCompliance Matters: “As for your query around RBS info and the Treasury, all we can say is that we announced our intention to the stock exchange at 7am on Thursday [10th]. We have nothing further to comment or add.”

 

Peter de Vink, a holder of RBS stock, has reportedly asked the City of London Police, the Scottish police, the Financial Conduct Authority and the Lord Advocate of Scotland to investigate the dislcosure.

 

Salmond strikes back

 

It has also been reported that Lloyds Banking Group has floated the idea of relocation from Scotland to London in case of a breakaway. Salmond, however, had this to say during a recent speech: “I've also heard many times on the BBC the argument that Lloyds Banking Group are about to move their headquarters to London. I'd have thought, given the headquarters of the BBC in London, that the BBC might have known that Lloyds Banking Group has their headquarters in London – has had for many, many years.”

 

He went on: “The Treasury – officials or ministers – are not allowed to brief market-sensitive information. Market-sensitive information, and this is a basic rule, cannot be released prior to the market announcement at 7 o'clock this morning. The Royal Bank of Scotland share price changed overnight. This is a matter of extraordinary gravity.”

 

September 12, BBC economics editor Robert Peston seemed to agree, providing his column with this headline: "Treasury briefed RBS move before board decision." Peston made the following revelation, quoting a source.

 

"On the News at 10 on Wednesday September 10, my colleague Nick Robinson disclosed that Lloyds and RBS would be moving...the Sun newspaper also had the story...At 10.16pm that evening I and other journalists were emailed by the Treasury to be told that...RBS had...plans to base themselves in London." I learned today that RBS's board was still meeting at this time, to decide...it finished around 11pm. In other words, the Treasury was briefing about its plans to relocate before the board had formally decided to release this information. It is certainly unusual for details of company decisions to be released to the media by the government before those decisions have been made."

 

Heywood in the spotlight

 

The country's top civil servant has just been plunged into further controversy, with revelations from the editor of the London Financial Times that Sir Jeremy has spent the last few months asking business leaders to pour cold water publicly on the economic prospects of an independent Scotland. He told the Today programme: “We know Jeremy Heywood has been on the phone to business leaders asking them to speak up about their concerns.”

 

Sir Jeremy has famously denied that the disclosure breached the so-called Ministerial Code, a set of rules originally drawn up by Tony Blair to impose prime ministerial restraints on ministerial behaviour. Civil servants are legally obliged to be politically neutral.

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