More large local government pension funds are considering joining North Yorkshire and Merseyside in suing Sir Fred Goodwin and the Royal Bank of Scotland. The MJ has learned at least four other major funds are evaluating moves to join the US-based class action lawsuit against the former RBS chief executive and the bank, which is now 68% owned by UK taxpayers. North Yorkshire and Merseyside are lead plaintiffs in a class action against RBS filed in New York on 13 March. Speaking on 17 March, a source close to the lawsuit said: ‘We're aware of four other major funds within the local government pension scheme expressing interest. Class actions are new to local authorities – they are studying how this process works – so we don't expect immediate decisions.' The pension funds, worth a combined £4bn, are seeking compensation for ‘massive losses' incurred following the slump in RBS's share price, but they also want RBS to change its corporate governance structures. They have secured the expertise of Cherie Booth QC, wife of former prime minister Tony Blair, to oversee their case. If successful, the lawsuit could force RBS to pay out hundreds of millions of pounds. The case would be based in the US because, as the funds' lead lawyers, the Coughlin Group, claimed ‘many of the toxic assets and crippling liabilities that have destroyed RBS originated or were created by RBS's US investment banking unit, RBS Greenwich Capital'. Ms Booth, who will advise Coughlin, said: ‘This is a significant case, not only for the massive losses inflicted on local authority pension schemes, but also for the potential to protect investors in future by significantly raising the standards for good governance in major UK companies. ‘A huge number of pensioners depend upon investments made by their pension funds and our pension funds in turn rely on vigorous, transparent and honest markets to meet their obligations.' Lawyers have also targeted Sir Fred Goodwin because, they claim, he ‘falsely reassured' investors the bank was in good health when it was ‘effectively insolvent' because of bad loans. The Goal Group, class action specialists, urged other council pension funds to join the lawsuit. Stephen Everard, Goal's managing director, said: ‘Local authorities not participating in US class actions such as the RBS case risk losing out on a massive opportunity to seek compensation and plug their escalating pension gap.' Reaction across Whitehall, however, was muted. Senior sources said they were ‘slightly wary' as the action involves taxpayer-funded bodies – town hall pension schemes – suing a bank predominantly owned by UK taxpayers. A CLG spokeswoman moved to distance the department from the claim: ‘LGPS administering authorities, such as Merseyside and North Yorkshire, are responsible for all decisions taken in respect of the management and investment of their pension funds, including class actions of this type,' she said.
