More than seven years after Dame Linda Dobbs was appointed to investigate whether Lloyds Banking Group covered up a £1bn fraud scandal at HBOS, victims of the scandal are still waiting for answers.
The review, initially expected to take several months, is now threatening to become one of the slowest official reports in British history, and allegations are mounting that it could further deepen the alleged cover-up.
Dame Linda Dobbs, a former Supreme Court judge, was appointed in April 2017 to review Lloyds’ response to a fraud involving the Reading branch of HBOS, which the bank took over in 2009. The fraud involved bankers and advisors who took advantage of predatory credit policies. This led to the collapse of several small and medium-sized companies. Six people were jailed in 2017 for their involvement in the fraud, including Lynden Scourfield, a banker at HBOS, and David Mills, the ringleader of Quayside Corporate Services, a consultancy that took advantage of HBOS customers.
Although Lloyds eventually acknowledged that victims suffered as a result of Quayside’s actions, many victims, including media personality Noel Edmonds, fear the lengthy review process shields those at the top from responsibility. Edmonds, whose company Unique Group was a victim, has compared the Dobbs review to the infamously lengthy Edinburgh Tram investigation, which lasted almost nine years and became more controversial than the issue it was intended to investigate.
A senior banking source said executives at Lloyds and HBOS were aware of the problems at the Reading branch as early as 2007 but chose to collect on the debts of the affected companies rather than tackle the fraud. “Instead of acknowledging and fixing the problem, they decided the best option was to continue destroying companies in the hopes of eliminating the problem. To me it seems pretty clear,” the source said.
Paul and Nikki Turner, owners of music publishing company Zenith, which was ruined by the fraud, expressed disillusionment with the review’s progress and accused Lloyds of hoping the truth would never come out. In a correspondence with the review’s attorney, Adam Wiseman KC, the Turners questioned whether they had misplaced their confidence in the review’s integrity. In response, Dobbs assured them that their “no stone unturned” approach remained the goal, although the review is still accepting new information as of this year.
The Dobbs review is investigating claims that Lloyds covered up the HBOS fraud, thwarted police investigations and exacerbated the suffering of victims. The scope of the investigation is extensive, including oral and written testimony from numerous witnesses and a review of hundreds of thousands of documents spanning nearly two decades. However, because it is a non-statutory investigation, Dobbs cannot compel witnesses to participate, which has led to delays.
The review progressed slowly, with complex and time-consuming processes for dealing with confidential documents covered by attorney-client privilege, as well as difficulties in coordinating witness availability. Although the review has begun to be developed, significant analysis is still pending, prompting calls from the industry for greater transparency. Some victims have suggested that Dobbs should release an interim summary to provide clarity on the review’s findings so far.
Mark Brown, general secretary of the BTU, the independent union representing Lloyds employees, criticized the protracted nature of the investigation and suggested that Lloyds might be content if the investigation was “put on hold”. He called on Dobbs to name those responsible for the delays and to hold Lloyds to account for its role in extending the review.
Lloyds has already incurred £1.3 billion in costs related to the scandal, including the cost of compensation schemes and the ongoing review. The bank claims it is cooperating fully with the investigation and has apologized to customers affected by the fraud. A spokesman for Lloyds said: “Our intention has always been and continues to be to provide fair and generous remuneration.” The bank has committed to providing a copy of the final report to the Treasury Select Committee upon completion.
Dame Linda Dobbs continues to emphasize the importance of a thorough investigation, stating: “Where serious allegations have been made about the adequacy of previous investigations, I owe it to the victims to carry out a full investigation and reach informed conclusions.” This means that there are no shortcuts.” As the review nears completion, victims and the public continue to wait for a full account of what went wrong and who should be held accountable.
