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New legal action over latest RBS bail out

By Admin, 3 February 2010

Last November's £25 billion cash injection deemed 'unlawful' by WDM and the Treasury's intervention in bankers' bonuses strengthens our case.

WDM, together with PLATFORM and People and Planet today served the Treasury with an application to the High Court, challenging last November's decision to provide a further £25 billion of public money to the Royal Bank of Scotland.

According to the Treasury's guidance, when determining if and how public money is spent, an assessment of the likely impact the proposed spending will have on human rights and the environment has to be completed before the money can be provided. We believe that no proper assessment was undertaken and that the Treasury has failed to adequately calculate the negative impact of allowing RBS to invest taxpayers' money into harmful projects.

Rosa Curling from our solicitors Leigh Day & Co Solicitors commented: “The assessment completed by the Treasury fails completely to comply with the mandatory requirements of its own guidance and its failure to apply a consistent policy by insisting on control over the payment of bonuses but not over the lending to climate change and human rights damaging projects is unlawful.”

Legal action last year

We also took the Treasury to the High Court last year. One of the reasons given then for not ensuring public money invested in RBS was spent in a way consistent with the Treasury's own commitments on human rights and climate change was that such a restriction would be harmful to the “financial stability” of the bank. The Treasury also argued that to use RBS’ need for capital as a mechanism by which the Treasury could impose wider Government policy objectives would be inappropriate.  We argue this is clearly inconsistent with the Treasury’s position and subsequent intervention over the bonuses awarded by RBS to its staff. 

RBS should stop investing in harmful projects

A condition of RBS receiving the November cash injection under the Asset Protection Scheme was that it would increase lending to businesses and home owners and not pay cash bonuses to staff earning over £39,000. A similar condition could and should have been imposed on RBS in relation to their investments in projects and companies which are harmful to the environment and human rights. The Treasury's 'hypocrisy' is particularly irresponsible given that RBS is notorious for providing money to projects and companies which are harmful to climate change and associated with appalling breaches in human rights.

Deborah Doane, director of the World Development Movement said: "It is difficult to understand why the Treasury can order RBS to increase its lending to small businesses and home owners or curb bonuses but believe it would be unlawful for it to tell RBS to phase out its lending in hugely controversial tar sands, and investing in low carbon projects instead.  This is hypocrisy on a grand scale. The Treasury has shown that is has the power, if not the will, to intervene in RBS’ lending for the public good."

Where is our money going?

In January 2009, RBS helped raise £400 million for the Irish company Tullow Oil, and in March 2009 RBS was part of a consortium of 14 banks that lent £1.4 billion to Tullow Oil. Tullow Oil is involved in the exploration and extraction of oil on the border between Uganda and the Democratic Republic of Congo (DRC). This area has seen some of the fiercest fighting in an extractive resource-driven civil war as rival armies and militias have struggled for control of the land.

Tullow has been the subject of recent controversy in Uganda over the oil contracts it has signed with the Ugandan government. Tullow Oil had consistently claimed that its contracts with Kampala were "the best deals in the world" for the government, but a review of Uganda's contracts commissioned by the Norwegian Agency for International Cooperation (NORAD) in 2008 concluded that the profit-share model adopted "cannot be regarded as being in accordance with the interests of the host country".

The 20-year contracts, consistently weak or completely silent on human rights protection, also include a sweeping "stabilisation clause" - article 19 requires the Ugandan government to compensate the companies for any future change in the law that affects their profits - designed to militate against improvements in environmental standards.

We first launched legal action in June last year over the initial bail out, after an initial set back when the High Court blocked permission for Judicial Review, we lodged an appeal at the Court of Appeal, which will be heard on February 18th.

New legal action over latest RBS bail out | World Development

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to Age the God Thanks for

to Age the God Thanks for your message...we are carrying out this legal action because we believe that what the Treasury is doing is wrong. They are saying - and you agree - that they shouldn't interfere with how RBS spends our money..

As majority shareholders, we have a right to hold RBS and ultimately the Treasury to account for how they are spending our money. Is it right that our money goes to Irish oil company, Tullow Oil, to expand its operations in Uganda and the Democratic Republic of Congo -where an oil diven war is causing misery and more poverty for millions of people...? i don't think so..

Also just to say we're not single issue - we are camapigning for justice for the world's poorest people - and then means speaking up about climate change, human rights, trade justice, debt issues...when you compare us to the Treasury - they're the people who only care about a single issue - and that's money.

Frankly I'm appalled at this

Frankly I'm appalled at this completely pointless exercise no doubt being carried out because it looks like good publicity. As a private shareholder in RBS I totally agree with the Government stance on minimal interference. The last thing that I, and probably the majority of UK citizens, want is a return to old-fashioned nationalisation where the government intefered with and destroyed whole industries within the UK just to satisfy political pressure groups such as yourself. As a UK Taxpayer I also resent the UK Treasury having to spend my money on legal fees to defend itself against any and all pressure groups with nothing better to do with their time. If you have a pile of mopney going spare then do the decent thing and donate it to the Treasury - sorting out the countries finances is much more important than this legal action. Finally I do wish that "single issue" organisations weren't so biased in their opinion polls or petition. The petition only allowed me to agree with the statement. Consequently, because I couldn't register it against the actual pol can you please take this comment as a very firm "No".

response to 'Frankly I'm appalled a this'

I believe I am (as are you) very fortunate to live in a country that can offer me a decent standard of living. I have food, warmth and shelter whenever I want it. In addition I too have been fortunate enough to have a bank account with money to spend and save.

I believe it is purely luck that I was born in the UK as opposed to the battle ground that is and has been in the Congo for many years. If I were living close to the congo-ugandan border in a war stricken area struggling to find the basic means of survival for myself and my children I would feel outraged at the lack of consideration given by western development in terms of its effect on my local community and on the environment at large.

And why shouldn't I care what RBS are doing with MY money - I find it hard to imagine why anyone isn't interested in whether their hard earned money is being used to fund cluster bomb producers when the UK has signed a ban to stop the production of cluster bombs.

However: RSB, Barclays and HSBC manage to continue to invest in these bombs outside the UK. The bombs are being banned because they cannot distinguish between military and civilian targets and a third of their recorded casualties are children. You obviously don't have children or this would surely concern you. Maybe you don't care about the environment and the effects of climate change on the planet.

Maybe you don't have children or grandchildren (or friends even!) and maybe you are only concerned for your own personal existence. This is the only conclusion I can come to from your self-centered point of view.

'Who do you trust? An whom do

'Who do you trust? An whom do you serve?' It's a tagline from a sci-fi series I can barely remember but it seems appropriate.

Are we all servants of decency and the common good helping each other out in terms of the straight and narrow, or does the government have the power to be morally autonomous? Do you see it as a perfect paternal authority that must be left in it's study and allowed to get on with looking after us?

WDM are just expressing a concern, and that is okay. Perhaps you might respectfully debate modifying the current system for doing that. We are not talking here about even civil disobedience or acting against the government in any way that isn't invited by the system; challenges like this are allowed because there is a need for checks, challenges and feedback to shape development just like any other system in nature.

It is a shared best guess about the optimal path forward but millions of lives are worth considering, and many in the government would assent to that statement. 'But Daddy the bombs are falling, I'm scared and so are my friends; please come out of the study.'

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