Yahoo Finance Barclays and KPMG plotted to let a stone firm go bust, it says
Barclays has been accused of behaving like RBS’s notorious Global Restructuring Group in allowing a viable business to go bust in order to recoup its loans.
The High Court case alleges that Barclays misled the producer of Portland Stone for some of London’s finest buildings and war memorials into thinking it was about to extend a loan to get it over a temporary cash crisis in 2010.
In fact, the claimant alleges, the bank was plotting with KPMG to force the business into administration so it could recover its previous loans. Barclays and KPMG vehemently deny wrongdoing over the claims of Portland Stone Firms and its boss Geoffrey Smith, who lost millions of pounds from his mining company’s collapse.
They are in the High Court this week appealing to get the case struck out. Portland claims Barclays lent it money to help fund the 2004 takeover of a neighbouring stone quarrying firm.
While the acquisition and integration went well, the company claims it got into what it says were temporary cashflow problems while moving production buildings during the integration.
Portland said it was confident the issue was temporary, as a big London hotel project, the Silken in Aldwych, was about to resume.
While signalling to Smith that it was confident it would be able to lend him the extra money, Barclays put Portland into its business support unit for distressed companies, the case claims.
It also engaged KPMG to assess the state of the business. Smith claims he was told the accountant was doing a “security review” for the new loan. In fact, Smith claims, the bank had decided not to give the loan and had privately told KPMG this.
He alleges the bank had opted to let the company “drift” until it fell into administration, allowing the bank to recover its original 2004 debt.
A Barclays spokesman said: “Whilst we can’t comment on this specific case, Barclays has a very strong reputation for turning around struggling businesses, with over 70% continuing to trade. Our Business Support team has never been a ‘profit centre’ for the bank. However there will always be some cases where businesses are sadly no longer financially viable due to changes in their circumstances and markets."
The hearing continues.
