Pressure builds on Lloyds to publish review of £1bn HBOS fraud

A City grandee, business groups and a staff union have urged MPs to intervene to ensure the publication of a long-delayed report on a £1 billion fraud at Lloyds Banking Group.
Lord Tyrie, former chairman of the Treasury committee, said the handling of the Dame Linda Dobbs review into whether Lloyds covered up a fraud at HBOS, the lender it rescued in 2009, was “itself becoming a scandal”.
Lloyds is declining to commit itself to providing the full report by the retired high court judge to MPs, leading to concerns that it may never be published.
The committee had said in 2018 that it welcomed the bank’s “commitment” to sharing the “unredacted” review with them but Lloyds’ position is that it never promised to do more than share “the findings” with MPs. It is declining to explain what this means.
Baroness Morgan of Cotes, chairwoman of the Treasury committee at the time, told this newspaper: “On the basis of what we said in 2018, I’d definitely have expected to see a full, unredacted report — not just the conclusions.”
Adding to the pressure on the bank the Conservative MP and former business minister Kevin Hollinrake has written to Charlie Nunn, the Lloyds chief executive, asking for a commitment to publication.
SME Alliance and Transparency Task Force, two organisations whose members include victims of the scandal, are understood to be planning letters to Dame Meg Hillier, present chairwoman of the Treasury committee, calling for the intervention of MPs.
The review relates to Lloyds’ response to a fraud linked to the Reading branch of HBOS. Bankers and business consultants exploited reckless credit policies to steal from HBOS. Scores of small and medium-sized businesses were wrecked and hundreds more were caught up in the fallout.
Dobbs is looking into whether Lloyds covered up the affair, including the alleged obstruction of a police inquiry that led to the jailing of six people in 2017.
Dobbs, 73, was appointed in April 2017 and originally said her review of the scandal would take a “matter of months” but it has not been completed and is turning into one of the most protracted official reviews in living memory.
An internal report commissioned by Lloyds, but that the bank distanced itself from, claimed that it was “highly probable” that its rescue of HBOS would “not have proceeded” if what was known by HBOS executives about the Reading scam had been disclosed before a £4 billion rights issue in 2008.
Tyrie told The Times: “Seven years on we don’t even have an interim report to mark progress. Fairness and remedy delayed can become fairness and remedy denied.”
Tyrie, who also chaired the parliamentary commission on banking standards, said the committee had a “great opportunity to reassert parliament’s commitment to transparency. For example, they could tell Lloyds they expect parliament to see the full unredacted report. And the committee could examine the reasonableness of any requests from Lloyds for redactions. If co-operation is not forthcoming, parliament could deploy a wide range of tools to secure it.”
In his letter to Nunn, Hollinrake wrote: “This report was commissioned to bring clarity, transparency and accountability following one of the most significant banking scandals in recent memory.
“Releasing the report in its entirety is not merely an exercise in transparency but a pivotal step towards accountability.” Hollinrake, a former member of the committee, called on Nunn to “consider the long-term implications of withholding any part” of the review.
Lloyds replied on Friday evening repeating its commitment to sharing “findings”. Hollinrake said: “Charlie Nunn needs to recognise the context of this scandal, not least that HBOS defrauded its own business customers and then denied it for a decade. If the bank really has learnt from their mistakes they must release the report in full rather than simply publishing what they want the public to see.”
SME Alliance said: “Lloyds should not be allowed to control the publication strategy for a report looking into an alleged cover-up that Lloyds itself perpetrated.”
BTU, the largest independent trade union representing Lloyds staff, has written to Hillier calling on the committee to call Dobbs to appear before MPs to “explain why her review is taking so long to produce”.
Dobbs has said she intends to write her report in a form that can be made public but that it is up to the bank whether it is published, adding: “As a general principle I favour transparency.” She has said that the availability of witnesses was among the reasons her report was taking so much longer than expected.
Tyrie said: “If co-operation is not forthcoming, parliament could deploy a wide range of tools to secure it. For example, they could require the witnesses to attend a Treasury committee hearing. The committee needs the truth.”
A Lloyds spokesman said: “We have committed to making the findings of Dame Linda’s review available to the committee.”
The committee declined to comment.