London, Feb 3 2010
Last November's £25 billion cash injection deemed 'unlawful' by
* Treasury's intervention in
bankers' bonuses strengthens campaigners case
Three pressure groups today served the Treasury
with their application to the High Court, challenging last November's decision
to provide a further £25 billion of public money to the Royal Bank of Scotland.
According to the Treasury's guidance, when
determining if and how public money is spent, an assessment of the likely
impact the proposed spending will have on human rights and the environment has
to be completed before the money can be provided. The World Development
Movement, PLATFORM and People & Planet believe that no proper assessment
was undertaken and that the Treasury have failed to adequately calculate the
negative impact of allowing RBS to invest taxpayers' money into harmful
The same groups took the Treasury to the High
Court last year where one of reasons given by the Treasury for not ensuring
public money invested in RBS is spent in a way consistent with its own
commitments on human rights and climate change is that such a restriction would
be harmful to the
"financial stability" of the bank. The
Treasury also argued that to use RBS' need for capital as a mechanism by which
the Treasury could impose wider Government policy objectives would be
inappropriate. The campaigners argue this is clearly inconsistent with the
Treasury's position and subsequent intervention over the bonuses awarded by RBS
to its staff.
A condition of RBS receiving the November cash
injection under the Asset Protection Scheme was that it would increase lending
to businesses and home owners and not pay cash bonuses to staff earning over
£39,000. The campaigners say that a similar condition could and should have
imposed on RBS in relation to their investments in
projects and companies which are harmful to the environment and human rights.
The Treasury's 'hypocrisy' is particularly irresponsible given that RBS is
notorious for providing money to projects and companies which are harmful to
climate change and associated with appalling breaches in human rights.
CASE STUDY: Where our money is going? Tullow
Oil in border region of Uganda and the Democratic Republic of Congo
In January 2009, RBS helped
raise £400 million for the Irish company Tullow Oil, and in March 2009 RBS was
part of a consortium of 14 banks that lent £1.4 billion to Tullow Oil. Tullow
Oil is involved in the exploration and extraction of oil on the border between
Uganda and the Democratic Republic of Congo (DRC). This area has seen some of
the fiercest fighting in an extractive resource-driven civil war as rival
armies and militias have struggled for control of the land.
Rosa Curling of Leigh Day & Co Solicitors
"The assessment completed by the Treasury
fails completely to comply with the mandatory requirements of its own guidance
and its failure to apply a consistent policy by insisting on control over the
payment of bonuses but not over the lending to climate change and human rights
damaging projects is unlawful."
Deborah Doane, director of the World Development
"It is difficult to understand why the
Treasury can order RBS to increase its lending to small businesses and home
owners or curb bonuses but believe it would be unlawful for it to tell RBS to
phase out its lending in hugely controversial tar sands, and investing in low
instead. This is hypocrisy on a grand scale.
The Treasury has shown that is has the power, if not the will, to intervene in
RBS' lending for the public good."
Mel Evans, campaigner at PLATFORM said:
"This second legal challenge is necessary
because the Treasury has failed the public again: it demonstrated that it could
act in the public interest by reining in city bonuses, but shirked once more
from curbing harmful investments. RBS is continuing to channel public
money into projects around the world that impact communities, ecosystems and
the climate - the Treasury demonstrated that it is within its power to prevent
this, which is exactly what we're calling on them to do."
Ian Leggett, director at People & Planet said:
"For the second time in a year we are
compelled to take the Treasury to court because of the way it is managing the
Royal Bank of Scotland. RBS is the dirtiest bank in the UK. It has a long track
record of financing projects and activities that will increase global carbon
emissions, make climate change more likely and are destroying precious
habitats. The Treasury has the power to require RBS to change - but its
consistent failure to do so indicates a total blind spot in Treasury when it
comes to responsible investment."
The organisations first launched legal action in
June last year over the initial bail out, after an initial set back when the
High Court blocked permission for Judicial Review, the groups lodged an appeal
at the Court of Appeal, which will be heard on February 19th.
Notes to editors
Tullow has been the subject of recent controversy
in Uganda over the oil contracts it has signed with the Ugandan government.
Tullow Oil had consistently claimed that its contracts with Kampala were
"the best deals in the world"[i] for the government, but a review of
Uganda's contracts commissioned by the Norwegian Agency for International
Cooperation (NORAD) in 2008 concluded that the profit-share model adopted
"cannot be regarded as being in accordance with the interests of the host
The 20-year contracts, consistently weak or completely
silent on human rights protection, also include a sweeping "stabilisation
clause" - article 19 requires the Ugandan government to compensate the
companies for any future change in the law that affects their profits -
designed to militate against improvements in environmental standards.