10/10/2016 Newsnight

Or a Rotten Bank for Small businesses?

Damning new evidence that RBS penalised distressed firms

to make money for itself, ignored warnings of potential

conflicts of interest, and mistreated healthy businesses.

But there's nothing worse when you know that you're - it sounds really

arrogant - you know you're good at what you do. This was, this was 35

years of my life and I knew I'd got it right.

We'll hear what the bank did, and what we should do in return.

Also tonight, we are leaving the EU partly to restore power

So should our Parliament not be allowed some say

It's a new a battle in the Brexit war.

It's not been a good week for clowns.

Donald Trump has had his troubles too - but did the debate

If I win, I am going to instruct my Attorney-General to get a special

prosecutor to look into your situation, because there has never

been so many lies, so much deception. There has never been

anything like it. To my mind, she's wrong about

everything, but she's wrong within the normal parameters of wrong. It's

the kind of wrong we've had before. It's a wrong we can endure. With

him, who knows. You don't need to get bogged down

in the details of the RBS story. RBS lent money to

lots of businesses. Some of them had problems -

maybe minor, maybe But then a cash-strapped RBS decided

to use business distress It would pretend it was there

to help the firms, put them into special measures

in its supportive turnaround And then, in some cases,

it fleeced them, tipping RBS even appeared willing to force

perfectly sound companies Now these allegations are not new,

but Newsnight and Buzzfeed have obtained a cache of interesting

documents the bank did not want Andrew Verity has

been through them. It has been another extraordinary

day of fast moving developments for Britain's financial world, so with

an economy eatering on the edge of recession and a squeeze on other

Government spending, where is all the money coming from?

2008, overborrowed, overlent and bailed out, RBS was under pressure

from its shock new owner, the Government, to get bad debts off the

books and boost its depleted cash. A fair goal, perhaps, but it was

accused of using foul means to achieve it, looking for ways to trip

up business customers so it could drain them of cash and get their

assets on the cheap, for a disregard for the owners who created them. RBS

furiously denied it. Now there's evidence these highly sensitive RBS

documents were leaked by a whistle-blower prompting an

investigation by Buzzfeed news and BBC Newsnight. They contain secret

information and internal e Mails, showing that while one part of the

bank was claiming to help business customers, another part of the bank

was collaborating with it, looking to buy up customers' property when

they got in trouble and extract maximum economic value. I'm sorry.

What I've always held onto is that I - I know what I'm doing. In what one

e-mail described as a dash for cash, RBS commercial bank staff could

boost their bonuses by scouring their loan books for defaulting

customers. Even if they'd never missed a payment, the bank had ways

of finding them in default. Imagine your mortgage lender telling you

it's revalued your property, the price has dropped and it's now worth

too little compared to your loan. Even though you may never have

missed a payment, it wants its mortgage money back. Then later you

find out that all along it had a property division that wanted to buy

your property for a gain. That wouldn't happen with residential

mortgages, they're regulated. But it's very much like what happened to

many business customers. This was the old back of the shop... Andy

Gibbs aan entrepreneur and architect. He made his dream real,

designing and building a thriving hub for creative companies. A lot of

my work is giving a hand rail to the past... In May 2008 RBS mis-sold him

a financial product, supposed to protect against rising interest

rates. When rates fell, it started draining cash from the business. The

bank's response to his business trouble was to put it in what it

says ways turn around division, the global restructuring group, GRG.

Then he was told the property had been revalued. It was now worth too

little compared to the loan. Tell us about the fees and interest rates.

At one stage, I found out that they'd cancelled my professional

indemnity insurance premium, which I have to have and could have damaged

me professionally. Foreignly I manage -- fortunately, I imagined to

sort that without a gap of time. They cancelled small Energy Bills,

the smallest one something like 6. ?6.53. It was all the time taking

away, taking away the control of what I had which was a beautiful and

energetic business really. Andy was warned he may have to sell assets or

go into insolvency. He raised more than ?500,000 selling the family

homement That money was swallowed up by GRG and it didn't change any

course of action whatsoever for a ten month period. So ?500,000 was

wasted? ?537,000 completely wasted and the family home gone. GRG wrote

demanding repayment of its loan. They continued to support his

business if they sold a stake in the business to West Register, the

bank's property company. He decloind and within days the bank called in

the receivers. He and his staff were thrown out. Andy lost his business,

then his health and then his marriage. I'd had a breakdown. At

one point, I'd lost four-and-a-half stone in hospital. I didn't actually

know when I was going to get out of hospital. What, for you, was the GRG

treatment? Sorry... Oh, God. Sorry. What I've always held onto is that I

erm...... I'm a good... I know what I'm doing. RBS says it's winding

down GRG but agreed business customers are now clubbing together

to try and sue the bank. I've spoken to a lot of people and I've heard a

lot of stories and I can hear within them a great repetition of the same

kinds of activities and actions. These are very unsavoury. These are

not the behaviour of a normal banking process to deal with

customers in stress. These appear to be the activities of an organisation

trying to acquire the assets of people who otherwise seem to have a

perfectly solid business. The bank's claimed for years GRG was an

intensive care unit to help stricken businesses recover. The documents

show that you didn't even have to be distressed. Falling out with the

bank or just wanting to leave and bank elsewhere, could mean a

referral to GRG. I've not seen one case where the evidence points to

the fact that they were artificially distressed to transfer to GRG. It

wasn't true. Just because of a break down in relationship with the bank.

No, there are a range of factors that point to financial distress. In

one e-mail they discuss provoking a default event for a customer. All

businesses that were transferred to GRG were in financial difficulty.

That's contradicted by an e-mail I have here. Would you look at it? It

might enlighten you to your bank's practises. It says they could

provoke a default event. This is in relation to GRG customer, provoke a

default event. Doesn't that suggest that GRG was engineering defaults?

No, look, I've spent two-and-a-half years looking at all the cases in

terms of GRG - You don't seem to want to look at this. I know what

your document says. You've seen the e-mail? I'm clear - Doesn't that

bother you. If you let me finish my answer, I'm really clear in all the

evidence I've seen over two-and-a-half years, looking at

millions of documents, there was no artificial distressing of businesses

to put them to GRG. Alison Loveday a litigation lawyer says RBS goes to

great lengths to stifle customers claims of wrongdoing. They were a

necessary evil, that's how the bank saw it. They knew most business

owners wouldn't have the mental resilience or the finance to be able

to challenge them and they were typically acting aloan, so it took a

long time for people to realise they weren't the only ones treated like

that. Why would the bank behave this way? Well, it could charge customers

in its turn around division much higher interest and fees, much of

the debt could be written off with a taxpayer supported the bank.

Crucially, capital, held against the risk that the loan went bad, could

be released, because it already had gone bad. Then there was what the

bank called its upside. If it could take a stake in the business or some

of its property, when the market bounced back, there should be big

gains. The Financial Conduct Authority ordered a report by two

firms of consultants checking out the allegations of mistreatment.

Nearly three years later, it's completed and with the FCA. The

regulator won't say when it will be published.

With me now is Andy Keats, a former RBS customer, who,

like Andi in the film, has had problems with the bank.

Also here is Sir Vince Cable, former Business Secretary,

with responsibility for overseeing the regulation of

Can I start with you, you represent many of the victims of what we've

seen described there, the SME alliances, you're involved with

that. How many of the businesses that were dragged into this GRG

group, how many were fundamentally bad businesses, had got into trouble

or needed help? As you say, I deal with hundreds, we support and

investigate hundreds of businesses and I'm one of those businesses

myself. It really annoys me actually to hear RBS saying what they've just

said that - They say no-one was made a distressed business that wasn't a

distressed business. I can tell you categorically that I've dealt with

literally tens of businesses myself, investigated them and found that

they were honest, proper businesses, properly run, with no defaults, no

distress and they were put into GRG just like me. Your case is an

interesting one. You weren't put into GRG... I was put into the

intensive care exposure committee and I didn't even realise for five

years that I was in it. You say that's because you were selling your

business and it was going to move the account to Barclays. Then they

started cutting up rough basically. We told them we were moving to

Barclays and four weeks later we had our merchant account terminated with

30 days' notice. They said that we were financially distressed. We were

moving to Barclays. Why would they say that? 14 days before that, we'd

had an offer for the purchase of the business, after four months of due

diligence. What was going on? You lost that offer and you lost the

move to Barclays because Barclays said, hang on, RBS has found

something dodgy here. Exactly. Then this has got caught up into your

personal life as opposed to your business life because now, they're

trying to repossess your house. What they did in the business, they then

took all my money. So they retained all of my business money until we

went bust. After we went bust, I unfortunately had a mortgage with

RBS and said to them, what do you want me to do, do you want me to

sell. They said no, they didn't want that. Wait until later

down-the-line. We entered into more borrowing facilities on the basis

that I was a good customer. We have so little time. Basically it ended

up with them saying, we're claiming money back from you and we need to

repossess the house. They said I was in arrears of ?50,000 when I was in

borrowing facilities. They've obviously been playing quite a rough

game with a lot of small businesses. What do you see today that you

didn't know when you were Business Secretary? Well, I discovered,

partly through lots of individual cases, but partly as a result of a

report that was done by somebody called Lawrence Tom Lynnson, who I

appointed. He collected case material which was exactly the kind

you've just heard and is corroborated in your report. The

problem we had was that there wasn't a smoking gun. There were a lot of

people who had been shot but we couldn't see the evidence within the

bank itself. I asked the bank to investigate this properly. They

called in Clifford Chance, who as far as I know, did a fairly

professional job, that they didn't have access to the material you've

now got. Crucially, I asked the regulator, the Financial Conduct

Authority, to do a proper investigation. They should have

published last year, but they haven't. It's worse than that

because I think they started the report back in the third quarter,

the end of 2013. And they said it would be ready in the third quarter

of 2014. I think we're now in the third quarter of 2016. What is going

on? Well, the conspiracy theories or just inefficiency, I don't know.

What would the conspiracy theory be? That they're covering tracks from -

Why would they cover the tracks of RBS? I don't know. From my point of

view, I was the minister who asked them to investigate. I'm very, very

disappointed that they haven't published it. Why they haven't

published it I don't know. Looking at the documents that we've got,

they lock a smoking gun because they are the conversations going on

internally. That's what we lacked before. There were a lot of people

damaged, there was circumstantial evidence that the bank were

profiting from these activities. But the other people would looked at it

have hitherto said well there's bad practice, but there's no evidence

it's been done systematically. Now this evidence you've acquired,

suggests that it may well have been. It is possible, the bank would say,

we are just people who are not understanding the game they are in,

they are trying to retrieve money for a taxpayer, incidentally, and

businesses who are in trouble are probably making the money in fees

and interest rates but are losing money on the fact they are writing

off chunks of their loan, and they are entitled to say they are going

to play hardball and by going to get everything they can? We are talking

about events in the aftermath of the financial crisis, there is a long

time lag, you are right, they are acting in the interests of the

taxpayer and even if they are found at fault, they will be fine, with

the taxpayer taking the fine, ludicrous situation. The fact is

many thousand companies will have been affected and many people will

have been ruined, marriages and mental health will have been

affected, and when it has happened on this scale, we cannot let this

matter drop. Thanks for joining us. Who in Britain should decide

what Brexit looks like? The Government is clear,

and it reiterated its position again today in a statement to the Commons:

it has to negotiate withdrawal and it has to decide

what we negotiate. It says the mandate for Britain

to leave the European Union is It also says it doesn't want any

kind of obstruction from So get out the way, leave the three

Brexiteers and Theresa May to it. But there is another view,

which is that Parliament should have the say on what kind

of deal we aim for. Now it is mostly Remainers who want

that, but not exclusively. This Conservative MP voted to Leave

and trenchantly made Nearly half of those who voted

wanted no substantive change at all in the relationship

between this country Their voices, although they did not

chime with my own, appear entirely to have been forgotten

in the rhetoric of hard Brexit which has somehow become

received wisdom on the part The government has

no mandate for that. You cannot extrapolate

from the result of the referendum the specific terms upon

which the majority of those in this country wish their relations

with the European Union And that can only be done by seeking

a mandate from this House to which the citizens of this

country return honourable members Our political editor,

Nick Watt, is with me. Are the government going to stick to

this? Very much. That in passionate plea from Stephen Phillips was

rebuffed by the speaker on the grounds that the Labour Party is

having a debate on this matter on Wednesday, so let them get on with

it. Some people were taken by Stephen Phillips who say maybe that

is a better option, if he had got his way he would have knocked out

the Labour debate and there would have just been a vote on a

generalised motion instead. But now with the Labour debate we have a

vote afterwards on a specific motion which is likely to call on the

government to seek the consent of MPs in Parliament regarding its

Brexit negotiations and there are some Labour MPs and a small number

of Conservative MPs who said they will maybe defeat the government and

that will not use David Davis who had ruled out a vote in parliament

on those Article 50 negotiations. It is a non-binding vote on Wednesday.

Yes. In terms of the substance of the negotiations, anything we didn't

know? David Davis said he would update MPs, and to days word he

covered a large piece, you play down the significance of the fall in

sterling and he gave a strong indication that in his mind UK would

not remain a member of the single market and it would not remain a

member of the customs union, but eyebrows were raised when he had a

pop at the French president Francois Hollande and Angela Merkel, remember

last week Francois Hollande said the UK would have to pay a price for

leaving to discourage others and Angela Merkel said if the UK wanted

to remain in the single market outside the EU it would have to

accept free movement of people. This is what he said in his exchange with

Crispin Blunt about Francois Hollande.

What plans does he have to publicly to publicly ennumerate

the implications of there being no deal at the end of two

What I will say to him at this point, is that...

If the European Union adheres to a punishment plan and it fails,

as I believe it would, then that's an even bigger

incentive to countries that want to leave, than a punishment

One senior Whitehall source said that by taking on Europe's two most

powerful leaders, David Davis was displaying what this person said was

an unhelpful swagger. Thank you. Joining me now is the Shadow Foreign

Secretary, Emily Thornberry, and Bernard Jenkin, Conservative MP

who was one of the leading He also chairs the Commons Public

Administration Committee. How would the House of Commons

express a view on a complex multidimensional negotiation? What

form would that take? It has a commons is not very good at voting

for complex things, it is very binary -- the House of Commons. I

understand that, but we're getting no information from the government

about how it is they are going to negotiate Brexit. We start on the

basis that we have instructions on the British people that they want to

leave and we want to do our job properly and we want to leave in the

best interests of the British people. I don't think this is right.

That the Tories have a mandate to go into a locked room and fight it out

amongst themselves and then decide which way they are going to leave

Europe, it is the future of my children and my grandchildren at

stake, the future of the economy and we think the government should come

to Parliament and put forward a plan. A plan before they negotiate?

Yes. They say they are paying their cards close to their chest because

it could undermine their position, but we know they have a load of

different ideas for stop what Philip Hammond things is different to what

Theresa May things and is different to what Liam Fox things, so on what

basis are we going to Europe? And different to what Bernard Jenkin

thinks. I'm sure it is. What is the mandate for the government taking

this ahead and doing it? The biggest ever vote cast for any single

proposition in this country ever, that is the mandate, to leave the

EU. The Leave campaign was very clear that leaving the EU meant

leaving the single market and the Remain campaign said if you vote to

leave we will have to leave the single market, so I don't see why

there is any argument about this now. What you are relying on is

Michael Gove, on one television programme saying he was... Saying we

would have to leave the single market. During the Brexit vote,

there was no, it was not clear what the options were, yes, we were going

to leave, but there are different ways of leaving the European Union,

and those options were not made clear. If you are lying on Michael

Gove, remember he is the man whose wife said you are only supposed to

blow the doors. He was not even serious in terms of leaving. It is

an important point, we are holding the Leave campaign to its promises

because they are not giving us 350 in pounds a week for the NHS. -- 300

?50 million. Norway is not in the European Union, so that is

compatible, if we adopt their model, that would be compatible with the

vote? On the question of accountability. Just answer the

question. It would be compatible with what the public voted for?

Except the Leave campaign said the Norway option would not be our

choice and we made that clear, and the Remain campaign said it would be

the worst option of all possible worlds, so who was advocating for

the Norway option? Nobody. The Swiss model is compatible with what the

public voted for, and the Canadian model is compatible. All of these

models are compatible. If I can just make my point. If I could make one

point about accountability, in the introduction to this discussion, it

was pointed at their is a debate on Wednesday and there will be a vote.

You could have put down a vote about what kind of Brexit you want, but

you are not doing that, you are having a family row about procedure.

It is not a family row. -- phoney. Your party is more divided than we

were about Brexit. You guys are in government, you have a new leader

who is taking a new direction and she did not even stand for

leadership herself, she has no manifesto, she has no mandate. It is

not clear on what basis you are leaving and it is right for us as

the opposition to hold you to account, excuse me. We are saying,

tell us what your plan is, we want to have a debate, the British people

need to know. You owe it to them. At the moment the government is

developing a plan, and when they have a fully fledged band I've no

doubt it will be tabled. -- fully fledged plan. The idea is that

Parliament will not have a say on that plan. That is not the case,

there will be a second reading of the vote in May or June on the

repeal Bill. That is not the same point. By that stage you will have

triggered Brexit. We need to have it before you triggered Brexit. They

are a motion. We need to know on the basis on which you are going into

those negotiations, you have two years after triggering Brexit and we

want to know the basis on which you are doing it. What is the plan on

migration and the continuing relationship with Europe. The single

market. I can answer those questions. The Prime Minister made

clear in her speech two weeks ago that what migration policy we have

as a country after we leave is a matter for the British Parliament,

that is a separate matter from taking back control over migration

which is not negotiable, end of story. What you think the majority

view in would be? -- what do. If you take the spectrum of options, exit

options, where would the majority be? The majority in parliament and

in the country, I think whether they voted to remain or to leave, did not

vote to take someone else's job away, did not vote to undermine the

economy, that is the priority. Where do you think the majority in

parliament would be? When it becomes clearer what the government is

proposing, that is the only practical way forward, and when

people understand that there isn't this Armageddon black hole in front

of the country, because we are leaving the European Union, the

House of Commons will support the position of the government, that is

what I think. What ever they come up with they will support. And if they

welcome you when put it to a vote, anyway. There are lots of votes. --

and if they won't come at you when put it to a vote, anyway. We will

come back to this. It is a procedural point, she's arguing. It

is about substance. Or a debasement of American

democracy? Hillary Clinton and Donald Trump had

a messy 90-minute encounter, And if you thought it might be

the end of Trump, you were wrong. Mark Urban has been looking

at what we learned. Donald Trump went into the second

debate after a wretched weekend, where he is demeaning comments about

women resulted a one poll putting Hillary Clinton 14 points ahead. She

sought to capitalise on her advantage. I said starting back in

June that he was not fit to be president and commander-in-chief and

many Republicans and independents have said the same thing. What we

all saw and heard on Friday was Donald talking about women, what he

thinks about women, what he does to women, and he has said that the

video doesn't represent who he is. But I think it is clear to anyone

who heard it that it represents exactly who he is. With Republican

party bigwigs melting away, and facing widespread condemnation,

Donald Trump went on to the offensive, fighting on multiple

fronts, first off, his attitude to women. He called out Bill Clinton

for alleged sexual assaults but also attempted deflection, than Bastin

Hillary Clinton for breaching of secrecy laws with her private

e-mails -- than Bastin. And covering up afterwards. I did not think I

would say this, but I'm going to say this and I hate to say it, but if I

went, I am going to instruct my Attorney General to get a special

prosecutor to look into your situation, because there has never

been so many lies, so much deception, there has never been

anything like it, we're going to have a special prosecutor. In this

90 minute onslaught Donald Trump interrupted her or the moderator 27

times, she interrupted just three times. And at moments she was on the

ropes. Nobody wants dizzy Hillary Clinton thrown into a, but they do

want to see her held accountable for the e-mails and the foundation and

it is the reason why Trump has done so well in this campaign, voters

think that he is the only one that would actually hold Washington

accountable. As the debate moved past its first half-hour, it allowed

Trump to allow a second perceived weakness on policy substance where

he tried to make the running on health care tax and foreign affairs.

But he ran into problems here, as well, disavowing remarks on Syria by

his own vice president shall running mate. He and I haven't spoken and I

disagree. You disagree with your running mate? Right now Syria is

fighting ices and we have people that want to fight both at the

signed time. -- Isis. The sensor disarray means he hasn't done enough

to reassure the party grandees who now wonder if they should let him

hang out to dry. I'm not sure if they would publicly abandon him,

that would probably impact the down ticket just as badly so they are

trying to figure out the way they can triage the situation. As the

house bigger told its members, it is important to find out what is

important in your district. He is not going to defend Donald Trump,

but they do not think abandoning the nominee is going to get Republicans

to the polls. Here Trump has shown contempt for

the GOP elite, may delight his base but it could hurt him on polling

day. I definitely think it hurts him. There's no question about it.

He needs to have as many people supporting him as possible. The

truth is Donald Trump is never really been a Republican in my view.

He's an independent. He's always really been an independent. After

nearly 90 minutes of slugging it out. They were asked to name one

thing they admired about the other. Hillary went first. Iery inspect his

children -- I respect his children. His children are incredibly able and

devoted and I think that says a lot about don oold. That hit Trump where

it hurts, with his lamentable attempts to improve his image with

women, where after the last few days, he has further to go than

ever. I don't believe he will have improved among women. His apology

wasn't well received. The comments that he made really bothered women

in particular. And frankly, in that debate, Hillary Clinton has run as a

champion of women. That's going to do well for her. What I do see

happening is that Trump continues to improve among men. You've got the

biggest gender gap in the history of American politics. Good night

everyone. The debate hardly revived Trump's fortune, but it did

supporters argue, show his refusal to buckle under pressure.

Well, this is clearly no ordinary election and Mr Trump does

not have the support of many natural Republicans.

He's in the UK at the moment, speaking at an Intelligence Squared

He has declared his support for Hillary -

I spoke to him earlier today, so does he think Donald Trump's

I would say yes, but I've been absolutely wrong

And so I think I may hex it if I just said yes.

Before this latest revelation of the inner Trump.

He was already slipping in the polls.

Now the thing to keep one's fingers across is, Hillary has

the electoral maths on her side, and yet she remains dependent

on groups of voters who are famous for not voting.

So, will she be able to get them out?

Of course, he's doing everything he can to help.

So my guess is, yes, I don't think his campaign is viable.

What portion of good college educated, professional

Generally speaking when pressed they will say, well,

he was my 18th choice for Republican candidate.

An office like the Presidency of the United States has to have

It is to the point for me, simply, that I would rather have

someone whose judgment I don't think greatly of and whose character

To my mind she is wrong about everything, but she is

wrong within the normal parameters of wrong.

It's a kind of wrong we've had before.

And I think a phenomenal like Trump is part of an underlying frustration

That has shown itself in all sorts of populist outbreaks

Trump, a rather comic version of that.

And if you want truly tragic, Vladimir Putin, too, is a populist.

And Brexit is a sort of example of it.

So is the rejection by the Colombians

So, you know, to what extent it is a comfort

What do you think of the Republican establishment?

Is there anything they could have done to stop him?

And a lot of them lined up to endorse him but were then

apparently shocked at this tape of sexual predatorship.

Did you find anything surprising in that tape?

Did you get a new insight into the real character

To be perfectly fair to Donald Trump, it was a weak field.

It may have looked good from afar but in point of fact

each of the candidates turned out to be lukewarm.

Dividing up the good sense vote, and leaving the poor sense vote

Then, not universally, but they lined up pretty quickly

to endorse him and then did Rick from Casablanca.

That this man should say those things.

Do you think impartial broadcasters and impartial newspapers should try

and cover this election in the way they would normally cover

an election between two candidates?

I think we just have to endeavour to do our best,

to find the best obtainable version of the truth.

To keep a straight face through some of this,

Would you use the phrase American politics is broken?

It's always had difficulties, hasn't it?

Are we in a particularly silly moment?

And is there danger in that silliness?

All of the above, yes. But, you know, democracy is always

It's a scary way to govern ourselves.

And the scariest part of it all of course being the famous

Churchill quote," it's worse than everything except everything

So, don't want to fall off that tightrope.

Now, you may have been following the rather worrying spate of people

dressed as knife-wielding clowns, terrifying unsuspecting punters

here's and abroad. The traditional view of the happy or at least sad

clown seems to have been consigned to history's rubbish bin. We've

tried to pin point the exact moment when clowns became irredeemably

scary for this generation. Our best guess is this: From the adaptation

of Stephen King's It from 1990. If you're afraid of clowns, look away

now. Good night. Come on up Richie. I've got a balloon for you. Don't

you want a balloon? What's the matter, one balloon not enough? Try

a bunch! LAUGHTER