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Yesterday Victor Blank former Chairman of LLOYDS BANK was asked about his knowledge of the criminality within HBOS prior to its acquisition by LLOYDS.

This is a HIGHLY RELEVANT question because this case is being brought by Lloyds shareholders who believe that the chairman and the board failed to exercise an appropriate level of due diligence and most significantly, failed to inform Lloyds shareholders about the risks associated with acquiring HBOS which was in effect a bankrupt bank.

This is a binary issue:

1- Victor Blank either failed in his duty to fully investigate every aspect of the operations of HBOS which he was about to acquire. Surely criminality on this scale would not be difficult for his advisers to discover? Remember in 2007 HBOS had conducted no less than 7 internal and external enquiries and had acknowledged the discovery of criminal activity.

2- Or Victor Blank chose to ignore the findings because he realised exposure would make it impossible for Lloyds to go ahead with the acquisition.

If option 2 is the truth it surely explains his response to yesterday’s questioning-

Q. Could you go to {H42/1818/14890}.
A. Yes.
Q. This was a letter to you from Mr Reade. Do you recall
receiving this letter?
A. No, I don’t.
Q. He says:
“We are customers of Lloyds TSB and I am …
personally a past victim of an HBOS debacle affecting my
former company and a loss of consideration.
“Our local Lloyds TSB manager suggested that
I should address this matter directly to you as it is
something you should be made aware of considering it has
complete relevance to your impending involvement with
“The allegedly fraudulent goings on with Quayside
Corporate and their unhealthy alliance with HBOS is
still unfolding after many years and has affected the
lives of around 50 company owners not to mention the
thousands of employees that have lost their jobs.
“Some of these owners are pro-active in attempting
to draw a halt to the unsavoury activities of
HBOS/Quayside and achieve some kind of justice for their
past and current misdemeanours. I am happy to be a part
of this group.
“I appreciate that the complexity of the documents
is a lot to absorb, especially at this time of
pre-occupation with other things, but I really hope you
will take it on board and favour me with a response.”
So you were being alerted, weren’t you, to
allegations of fraud going on involving
Quayside Corporate?
A. Is this the Reading branch affair, which has resulted in
convictions and so on?
Q. Yes.
A. I haven’t seen — I hadn’t seen this letter. The
process within the executive team was that there were
a team of people who dealt with complaints, customer
complaints, and they would take all the complaints that
came in, some trivial, some more major, as this was, and
would deal with them, and my attention would be drawn to
some but not to all. And I was not aware of this.
Q. But it’s alerting you, isn’t it, to a very substantial
potential fraud within HBOS?
A. But if I didn’t see it and I didn’t get it, I couldn’t
really deal with it, could I?
Q. Well, do you know what was done about it?
A. I believe it was looked into by the person who picked up
on complaints, I think it was a man called Richard Lee,
who replied to it and then passed it on for
Q. Investigation by whom?
A. Well, I believe by HBOS senior people.
Q. Could you go to {H44/1935/15490}.
A. Yeah.
Q. So this is Mr Lee to Mr Reade.
A. Yes.
Q. He says:
“Thank you for [your] letter of 13 October addressed
to our Chairman. I have been asked to respond on his
“As we are still in the very early stages of the
recently announced merger, it would not be appropriate
for us to respond to the issues you have raised.
However, I have forwarded a copy of your correspondence
to a senior colleague within HBOS.”
So it does appear that the correspondence was
forwarded within HBOS, but what about Lloyds itself?
Because you’re being alerted to a very large potential
fraud which could have financial implications to the
value of what you’re acquiring, as well as potentially
reputational issues. What was done within Lloyds?
A. I don’t know what I can say except that I didn’t see it
and all I know is what actually happened.
Q. Well, what you appear to be —
A. As we’ve got from this correspondence.
Q. But what you appear to be saying is that so far as
Lloyds is concerned, having been alerted to this
potential fraud, no steps were taken within Lloyds to
ascertain the implications of it, whether the
allegations were well founded, and what that might mean
for what Lloyds was acquiring?
A. I don’t know, as I think I’ve made clear. How could
I know if I didn’t see the stuff in the first place?
Q. It’s fair to say that as a bank you were being given
quite detailed information about the fraud, weren’t you?
A. Well, I haven’t seen it.


So, Victor Blank is expecting us to believe that he did not receive or have sight of a letter which detailed criminal activity.

Furthermore he is expecting us to accept that underlings in Lloyds bank did not think revelations of criminality in HBOS would be of any interest to the chairman.

Consider this point carefully-Victor Blank is pleading in his defence that he  made decisions based upon the very highest standards of due diligence and the most accurate information supplied by his advisers and so he did not adversely affect shareholders. But yesterday he  acknowledged that  his advisers had been informed of the criminality but they chose not to tell him.


This feels like a ‘Slam Dunk”- Victor Blank either did not receive the very best information and advice or he chose to ignore criminal activity.

There is of course a third possibility that he is lying.


More coming today.