Tuesday, August 07, 2007

NatWest Trio Say RBC Hindering Defence

The Globe and Mail, Tara Perkins, 7 August 2007

Lawyers for the three British bankers known as the NatWest Three allege Royal Bank of Canada is stonewalling their attempts to question RBC employees who might be able to help clear their clients' names.

The NatWest Three – Gary Mulgrew, Giles Darby and David Bermingham – were extradited to the United States last year after the U.S. government accused them of defrauding their former employer, National Westminster Bank PLC, of $7.3-million (U.S.) in a deal related to Enron.

The three men deny the allegations and are now awaiting a January trial in a Houston court.

The criminal allegations date back a number of years to a time when the NatWest Three worked for Greenwich NatWest, which has since been bought by Royal Bank of Scotland.

RBC hired the three British bankers in 2000, as it sought to build up a structured finance group in London, and they spent a period of time working for the Canadian bank.

Now, lawyers for the three want to question a number of people who are working for RBC in London, including John Burbidge, the chief operating officer of RBC's investment banking operations in Europe and Asia.

An RBC spokeswoman in Toronto said Monday that “RBC and its counsel have fully complied with all their legal responsibilities and have acted appropriately at all times throughout this matter.”

RBC has not been accused of any wrongdoing in the criminal case.

In court documents filed in Houston last week, the NatWest Three's lawyers allege that the Royal Bank of Scotland (RBS) and Royal Bank of Canada have taken steps to prevent them from obtaining testimony from former colleagues.

“Outside counsel for RBS and RBC have informed [the] Defendants that they represent dozens of their former colleagues (including numerous individuals that no longer work for either company), and that nearly all of the individuals represented by RBS's and RBC's corporate counsel are unwilling to meet with counsel for the defense, let alone travel to the United States to testify at trial,” the court documents allege.

They go on to allege that many of those individuals have said that they didn't know they were being represented by lawyers, and that they never authorized lawyers for RBS and RBC to represent them.

The NatWest Three's ability to mount a vigorous defence is being “severely compromised, if not eviscerated,” they state.

Foreigners who live and work outside of the U.S. are not subject to the Houston court's subpoena power, and therefore cannot be compelled to testify at the trial, the documents say.

The NatWest Three's defence team is hoping to invoke a treaty between the U.S. and Britain that would result in British authorities compelling the potential witnesses to give video depositions.

“We've made RBC's lawyers aware of many people that we would like to talk to,” Matt Hennessy, a lawyer for Mr. Darby, said yesterday. “The people that we want to speak to all have knowledge of the facts relevant to our case, and we believe that many of them possess exculpatory knowledge. They possess knowledge of facts which show that our clients are innocent,” he said.

“Many of the people who currently work at RBC formerly worked at NatWest at the same time as the defendants,” he added.

For instance, Mr. Hennessy and the other lawyers for the NatWest Three want to question Dai Clement, who is now the head of one of RBC's infrastructure investment banking groups in Europe. Mr. Clement used to be an associate director at Greenwich NatWest, and the court documents say he personally analyzed a transaction that is central to the criminal charges, and drafted a memo recommending it.

Mr. Clement has not been, and is not being, accused of wrongdoing. The NatWest Three's lawyers hope he can demonstrate that their clients did not act with the intent to defraud NatWest.

The fraud charges against the NatWest Three allege that they devised a scheme to defraud the National Westminster Bank and Greenwich NatWest in connection with the bank's sale of its interest in a Cayman Islands company, working in cahoots with former Enron chief financial officer Andrew Fastow.

Mr. Clement has his own attorney, and is not being represented by RBC's lawyers. His lawyer has said he is not willing to assist the defendants in any way, their court documents allege.

Mr. Hennessy would not name all of the RBC employees who the defence team wants to speak to, “for the sake of their privacy.”

“But RBC's counsel are well aware of who we want to speak to,” he said.

In addition to Mr. Clement, the NatWest Three's court documents are asking the Houston court and the British government for help in obtaining video depositions from four other London bankers, including RBC's Mr. Burbidge, who has been with the Canadian bank for about two decades. He was named vice-president of RBC's treasury operations for Europe and Asia in 1994, and a managing director of RBC Dominion Securities two years later.

The documents state the “defendants desire to ask Mr. Burbidge about RBC's investigation of [the] defendants' involvement in the transactions at issue in the [criminal charges] and [the] defendants' activities in connection with that investigation.”

Two of the other bankers whose video depositions are being formally requested now work for Royal Bank of Scotland. The final banker was a director at Greenwich NatWest.

A date has not yet been set for the Houston court to consider the defendants' request, Mr. Hennessy said.