Scottish software boss launches fresh £128m fraud case against RBS

Neil Mitchell, the former CEO of software company, Torex PLC, has said he is drafting a private indictment for conspiracy to defraud against the Edinburgh-based lender.

Court filings show the case to be the latest to allege misconduct by the bank’s now-notorious restructuring division known as the Global Restructuring Group (GRG), which is currently the subject of an ongoing investigation being carried-out by the financial services watchdog, the Financial Conduct Authority (FCA).

RBS has previously asked law firm Clifford Chance to undertake an independent review of GRG, which found no evidence of wrongdoing despite hundreds of small businesses claiming that the GRG mistreated them or forced them out of business.

Mr Mitchell is seeking the damages on claims that RBS conspired in 2007, before its nationalisation in the financial crash of 2008, with co-defendants KPMG and U.S.-based fund Cerberus Capital Management to sell assets of his company for below their value.

He is funding the proposed prosecution at Westminster Crown Court, alleging that the British state – which owns nearly three-quarters of the bank – has failed to investigate its actions.

Mr Mitchell is already suing RBS, its accountants KPMG and a New York firm called Cerberus Capital Management LP of New York for “Unlawful Means Conspiracy”– fraud – the first ever such case against a UK bank.

His latest claim against RBS stands at a total value of over £128 million and could set the precedent for thousands of additional legal cases.

Mr Mitchell alleges that the GRG “conspired by unlawful means” with Cerberus to sell Torex for a cut-price £204m. This, he said, was done to recoup £190m in loans RBS-led banks had made.

RBS said that it rejects the claims.

A spokeswoman for the bank said: “We have thoroughly investigated Mr Mitchell’s allegations and believe them to be entirely without merit. Mr Mitchell has chosen to issue legal proceedings which will be met by a full defence.”

RBS is also understood to reject any suggestion of criminal wrongdoing.

Meanwhile, The Sunday Times has reported that Cerberus, whose chairman is former US vice president Dan Quayle, is also understood to reject the claim.

However, Mr Mitchell believes GRG systemically defrauded hundreds of UK businesses on “an industrial scale”.

In a press statement, Mr Mitchell said: “This is a landmark case against a state-funded bank which I allege has been acting against the interests of taxpayers for a number of years. I am seeking justice not only for myself, but also in the public interest of the hundreds of viable British businesses, thousands of employees and their families, which have been destroyed by their greed.

“My family have been subjected to intimidation but I have never given up. The fight to expose the alleged corruption at the highest level at RBS continues.”

Like RBS, KPMG has also rejected allegations against it and members of its staff.

A spokesman said: “The courts have previously dismissed similar arguments and we have applied to have the current proceedings struck out.”