Fraud allegations hit Bank of Scotland
Lloyds Banking Group directors don't have their troubles to seek at today's annual general meeting in Glasgow.
A group of shareholders of what was Lloyds TSB is today launching its plans for legal action.
This is over the information given to them ahead of the takeover of Halifax Bank of Scotland.
The action could be against either the company, its advisers, the government or a combination of all three.
But that's not all Lloyds' legal problems, inherited with the takeover.
Some very serious allegations were made against Bank of Scotland corporate division at Westminster this week, with a call for a criminal investigation.
This follows BBC Radio 4's "File on 4" programme, which last week reported some of the detail of the case of Lynden Scourfield, a senior manager of Bank of Scotland's high risk lending unit at its Reading office.
He left rather abruptly, and in disputed circumstances, in 2007.
File on 4 heard from owners of business customers of the bank alleging that Mr Scourfield required them, as a condition for getting a loan, to employ an independent consultancy company specialising in turning around troubled businesses.
This was Quayside Corporate Services. It was alleged that a number of businesses ended up in more debt than before Quayside got involved.
The loans from HBOS's "high risk" unit between 2002 and 2007 are said to have led to losses at the bank of £250m.
Quayside Corporate Services have denied any wrongdoing, while Lloyds says its Bank of Scotland arm behaved in "a fair and responsible way".
For legal reasons, the BBC was unable last week to report several of the allegations.
But those restrictions did not apply to James Paice, Conservative MP for South-East Cambridgeshire.
He has constituents whose businesses were customers of the Bank of Scotland office in Reading.
So serious are his concerns that he used a debate at Westminster this week to put them on the record, where he does not have to have conclusive evidence and can avoid the risk of being sued.
MPs only use that privilege in exceptional cases.
The BBC is similarly protected in reporting what he said. Here is some of Mr Paice's speech in Westminster Hall:
"I believe Lynden Scourfield was responsible for making what may or may not have been poor financial positions into impossible ones, and in doing so probably enriched himself and others."
The MP stated: "My basic contention is that Lynden Scourfield lent considerable sums to more than 200 businesses and that in many, if not most, cases he required the businesses to engage Quayside as advisers or turnaround specialists.
"In many cases, he also required that a Quayside appointee be placed on the board.
"Then Quayside would advise significant increases in borrowing, which Scourfield authorised and in which the business owners acquiesced, as, after all, that was the advice of the bank's appointees.
"Subsequently, many of those businesses went down for far more than if Quayside had not been involved, and the assets of the businesses were acquired in one way or another by others involved with Quayside".
Following the BBC documentary, Mr Paice received a letter from a lawyer.
He told MPs that it read as follows: "I am presently acting for an individual, Clive Collins, whose business was taken away from him by HBOS and placed in the hands of Quayside.
"Quayside invoiced vast sums for doing very little work. They effectively asset-stripped the company until it could no longer trade.
"The business's main asset, a subsidiary company, was then sold to a different company owned by the directors of Quayside for £100,000, despite much higher offers made by independent third parties."
Speaking in Westminster, the MP also referred to a company called Seoul Nassau "which, I am told, went down for £34 million owed to HBOS".
He said: "It is alleged by someone who worked for the company's owner, in a letter that we received, that the owner's personal assistant would 'deliver a briefcase full of cash to Mr Scourfield to assist the loan'."
Mr Paice went on to say: "This allegation follows other stories that Mr Scourfield was benefiting from being, as the bank said, 'overly supportive', including, I am afraid, lurid stories of prostitutes being paid for from the funds of Quayside clients."
In his speech, Mr Paice raised several questions; about the lack of apparent controls on Mr Scourfield's lending: why the allegations of fraud that were taken to the bank were not then referred to the police: why regulatory authorities were not involved by Bank of Scotland: why the Bank did not use accredited members of the Institute of Turnaround Specialists, to which he said Quayside did not belong: why a consultancy involved in a company before it collapses can then benefit from its subsequent sale: and "if everything was satisfactory, why did HBOS stop using Quayside?"
Neither Lynden Scourfield nor his lawyer has commented on the allegations.
The founder of Quayside, David Mills, has denied any wrongdoing and said: "I and Quayside Corporate acted as advisers to a number of banks and accounting firms to help implement commercial decisions made by our clients to try to turn around failing businesses.
"I always kept the banks fully informed of progress with the businesses. Unfortunately, in a number of cases, companies were unable to pay off large debts incurred before Quayside Corporate Services' involvement."
MPs criticised Lloyds Banking Group for not properly investigating business customers' complaints.
A statement from Lloyds stated: "We simply cannot comment on individual circumstances. However, we strongly believe that we have acted throughout in a fair and responsible way.
"Bank of Scotland deals in a sensitive and fair way with all of its corporate banking customers, including those experiencing difficulties. We stand by our customers and support them closely in managing their financial difficulties."
It's probably wise not to comment further.