Court blocks challenge over unethical RBS investments

By staff writers
October 20, 2009

A High Court judge has today (20 October) blocked an attempt to launch a legal challenge over the government's use of taxpayers' money in Royal Bank of Scotland (RBS) investments which harm the environment and undermine human rights.

The three NGOs who brought the case condemned the decision and declared that they would appeal.

The news will please the Church of England which is a major shareholder in RBS having a stake in the company of £8.4 million.

David Wolfe QC, representing the World Development Movement (WDM), Platform and People & Planet, argued in court that the Treasury had failed to take adequate account of environmental and human rights considerations when using public money for RBS investments. The government has owned a 70 per cent stake in RBS since 2008.

Wolfe requested permission to proceed to a judicial review – a process by which a court considers whether a government body, in this case the Treasury, has complied with the law. The request was turned down by the judge, Philip Sales.

“The judgment means that RBS' profits come before the climate and human rights” said WDM director Deborah Doane, “This is particularly hard to swallow after Gordon Brown's soaring rhetoric on climate change”.

The NGOs' lawyers gave a string of examples of questionable companies and projects that RBS has financed with taxpayers' money. They argued that as a majority shareholder in the bailed-out bank, the Treasury legally misdirected themselves in relation to their legal obligations concerning communities and the environment under the Companies Act.

Mel Evans of Platform pointed out that the UK government had only last week criticised Vedanta Resources for failing to respect human rights in India – although they are propping up the company with public money through RBS investments.

The government's senior barrister, James Eadie QC, did not engage with the allegations about the effects of RBS spending, but said that the government should not require a bank to make decisions based on “non-commercial” considerations.

Eadie said that an ethical review of all RBS investments would be an “enormous and wholly impractical exercise”. He unintentionally triggered laughter from the public gallery when he insisted that RBS should be allowed “to operate as a proper bank”, implying that this ruled out ethical behaviour.

While the campaigners expressed disappointment at the final decision, their determination to challenge the government's use of taxpayers' money appears to be undiminished.

“People are fed up of the government saying one thing one day and doing the opposite the next,” said People & Planet supporter Jess Raw, “This case is a very good example. We want them to put their money where their mouth is.”

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