Via Yahoo Finance

Lloyds Banking Group has clashed with an independent review into the HBOS Reading scandal by refusing to pay the legal costs of a firm invited to give evidence to the inquiry.

The review headed by Dame Linda Dobbs, a former High Court judge, is examining whether bosses at Lloyds properly investigated claims that officials in the Reading branch of Halifax-Bank of Scotland (HBOS) destroyed customers’ businesses for personal gain.

Lloyds has refused to pay the legal costs of a firm involved in a dispute over the insolvency of one of Europe’s biggest hotels, even though Dame Linda believes the firm has evidence relevant to her review.

Lloyds appointed receivers in 2010 over HSS, owner of the Citywest Hotel in Dublin and a business customer of Bank of Scotland (Ireland), which Lloyds acquired as part of its disastrous 2009 takeover of HBOS.

Lansdowne Francs, an Irish accounting firm, advised HSS on a restructuring plan that was rejected by the bank-appointed receiver.

It claims the bank pushed HSS into insolvency by reneging on an offer to lend it €30m (£27m), and that the receiver sold the assets in 2014 to a consortium connected to a former Lloyds director.

Lansdowne Francs also claims the receiver wrongly sold land that was never owned by HSS, as it was held by one of the company’s directors.

Dame Linda invited the firm to contribute evidence to her review.

She wrote: “I believe it will be helpful to speak to you as you will have information which is relevant to the review. It is possible that the FCA [Financial Conduct Authority] may then also wish to speak to you about any relevant findings.”

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Dame Linda said Lloyds had confirmed it would pay the firm’s reasonable legal fees.

The bank is now refusing to pay because HSS was not a victim of the HBOS Reading scandal for which six people were convicted and Lloyds was ordered to pay a £46m fine.

A Lloyds spokesman said: “HSS was not a victim of the HBOS Reading fraud. While we appreciate that HSS may feel unhappy with certain matters relating to its receivership, as its experiences are unrelated to HBOS Reading we do not believe it is reasonable to meet its legal costs in this instance.”

He said it was for the receiver to consider restructuring proposals and obtain the best price possible from the sale of the business.

The Dobbs Review declined to comment.