LONDON — Six people accused of bribery and fraud that cost Halifax Bank of Scotland (HBOS) £245 million ($317 million) were found guilty on Monday.
Five of the six on trial — David Mills and Michael Bancroft who ran Quayside, accountants Tony Cartwright and Jonathan Cohen, and HBOS manager Mark Dobson had pleaded not guilty.
Lyndon Scourfield, who ran the HBOS impaired assets division, had pleaded guilty to six counts including corruption.
The BBC reported that the six will be sentenced on Thursday.
He lent large sums of money to troubled small businesses.
Prosecutors alleged that, between 2003 and 2007, the six were involved in a scam which saw a firm of consultants profit from the financial distress of small businesses that had been lent money by HBOS.
The BBC cited sources as saying the true cost of the fraud could be as much as £1 billion.
Scourfield’s loans went “well past the point when it would have been obvious to any honest banker that the bank debt could and would never be repaid,” the prosecuting lawyer, Brian O’Neill QC, told Southwark Crown Court, according to a report by the BBC when the case opened last year.
He then referred the businesses to Quayside Corporate Services in return for cash and gifts, while the consultants made large sums in fees from the troubled businesses. The total losses to the bank from the soured loans amounts to around £245 million.
Scourfield took gifts of cash, luxury holidays and “high class escorts.” One sex worker’s diary was entered into evidence in the trial. Prosecutors claimed that one sex worker recorded this note in her diary: “met guys, me, Amber and Suzie. Chinese meal. Then drinks at flat and quick shag. Easy £1500.”
HBOS, which owned the Halifax and Bank of Scotland brands, suffered heavy losses in the 2008 financial crisis and neared collapse as its funding was cut off by the credit crunch.
It had to be rescued by a combination of a public bailout and a merger with Lloyds TSB, costing the taxpayer around £20 billion in the early part of 2009.
So far, only one person — former HBOS wholesale banking chief Peter Cummings — has been fined and banned from working in the City by regulators investigating the collapse.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.