LIBERAL DEMOCRATS HAVE CALLED FOR THE SERIOUS FRAUD OFFICE TO LAUNCH CRIMINAL PROBE INTO RBS

Both the Liberal Democrats Shadow Chancellor, Vince Cable and the Leader of the Scottish Liberal Democrats, Tavish Scott have called for the Serious Fraud Office to launch a full-scale inquiry that would also look into the company's tax avoidance operations.

It has been alleged that RBS tied up at least £25bn in complex international tax-avoidance schemes during its boom years, costing the British and US treasuries more than £500million in lost revenue.

With the bank now 70 per cent owned by the taxpayer, it has put an end to the practice, which is not necessarily illegal but exploits gaps in other countries' tax laws.

However, there are allegations that RBS traders invested billions in so-called toxic debt, or sub-prime loans, as part of the schemes.

Vince Cable argued that an SFO inquiry "would be both prudent and proper given what we now know".

Tavish Scott, said: he has received e-mails from former RBS staff who allege that the bank had been "sailing close to the wind".

"We need to know more about what happened at RBS in the run-up to disaster, and to establish whether there has been a breach of the law," he said.

"As far as tax avoidance is concerned, it seems wrong that wealthy individuals and companies are allowed to cut corners while the Revenue comes after ordinary people for an extra 15p."

The SFO said there was no formal criminal investigation "at the moment", but it had been in contact with the Financial Services Authority to determine whether events at RBS were regulatory or criminal matters.