* Canada, RBS locked in battle over Libor documents
* RBS suggests Canada use UK treaty to get documents
* Legal expert says Britain might not cooperate
By Randall Palmer
OTTAWA, Jan 25 Britain cannot be relied on to
force Royal Bank of Scotland Group Plc to give Canadian
authorities documents on alleged interest rate rigging, because
the British government is RBS's majority shareholder, Canada's
Competition Bureau argued this month.
An affidavit filed by Canadian lawyer on behalf of the
Competition Bureau was the latest salvo in a sometimes nasty
battle between the bureau and RBS over whether the bureau can
compel the British banking group's Canadian subsidiary to hand
over potentially damning records held at RBS's head office or
elsewhere outside Canada.
The bureau, an arm's length agency of the Canadian
government, is investigating whether RBS colluded with other
banks and brokers in setting the yen London interbank offered
rate (Libor) as part of a global rate-fixing scandal. At stake
are corporate reputations and potentially huge fines.
RBS has argued that the Canadian government, acting for the
bureau, could ask the British government, under a mutual legal
assistance treaty, to compel the bank's head office to produce
the documents instead of going to an Ontario court to try to
force the Canadian subsidiary to hand them over.
University of Toronto law professor Michael Trebilcock, in
an affidavit filed this month for the bureau at the Ontario
Superior Court of Justice, suggested, however, that the British
might just say no to Canada, the treaty notwithstanding.
"Cooperating with a request by the Canadian government poses
significant risks for the UK government in terms of the
potential criminal and civil liability of RBS for its role in
the alleged international conspiracy to fix Libor rates, given
its substantial equity interest in RBS, and hence it faces a
fundamental conflict of interest," Trebilcock wrote.
He pointed out that as the result of bailouts during the
recent financial crisis, the British government holds an 82
percent equity interest in RBS.
Trebilcock said London had broad discretion under the treaty
to refuse any request from Ottawa if it thought it "would
seriously impair its sovereignty, national security or other
essential public interests or for any reason related to its
The Competition Bureau engaged in a public slanging match
with RBS in November, issuing a statement that said it was false
and misleading for RBS to say in its quarterly earnings report
that the bank was "cooperating fully" with the Canadian
RBS countered with a statement that it was "simply not
accurate to imply that we do not want to cooperate".
The RBS side has contended that even the "cooperating party"
in this case - identified by people familiar with the case as
Swiss bank UBS AG - had withheld information due to
possible privacy considerations.
But Ann Salvatore of the Competition Bureau, in another
affidavit filed this month, said that while the cooperating
party did provide only redacted documents when it first came
forward with information in May 2011, it provided unedited
records last June.
A court date has yet to be set for hearing oral arguments on
RBS's challenge to the Competition Bureau's right to its
The case is The Royal Bank of Scotland NV (Canada) Branch v
The Commissioner of Competition (31010).