We're paying for Fred the Shred's £500k legal defence:

t

We're paying for Fred the Shred's £500k legal defence: Taxpayers fork out huge sum on disgraced bank boss despite case having not even reached court yet

Taxpayers have forked out almost half a million pounds in legal fees to defend disgraced former Royal Bank of Scotland boss Fred Goodwin, it emerged last night.

Costs of £400,000 have already been racked up by law firms representing four former directors of the bank against a lawsuit brought by its shareholders �" even though the case has still not reached court.

If it does, the final bill will run to millions of pounds.

Mr Goodwin’s legal fees are being paid by the bank, despite the fact he draws a £342,500-a-year pension.

RBS is 82 per cent owned by the taxpayer after being bailed out during the financial crisis.

Image:queenie blue bridesmaid dresses

It means that the bank is effectively being subsidised by public funds to defend bosses who led it to the biggest state rescue in British corporate history.

The Mail revealed last year that taxpayers would end up footing the bill for the lawsuit, because it is normal for companies to pay the legal fees of former directors.

Leading City law firm Herbert Smith is representing RBS and the former directors, but it is understood that other firms have also been drafted in.

Banking sources last night said it was ‘absolutely impossible’ to estimate how much the suit would end up costing. RBS has previously said that the total could reach an eye-watering £42million.

The revelations of the scale of the costs so far caused fury. Labour MP John Mann said: ‘This is a disgrace. It’s a staggering amount of money and will only climb higher. It shouldn’t be happening, especially when the taxpayer owns this bank.’

Almost 400,000 shareholders, including many retail investors, have joined the RBS Shareholder Action Group, which is bringing the case.

During 2008 investors were asked to spend £12billion buying new shares to help the bank fund new deals.

The bank held large breakfast gatherings for interested shareholders, in which directors assured them of the health of the business.

But in the months that followed the value of the shares collapsed as the bank came to the brink of financial ruin.

In total, there are four cases being brought against the bank, which will be wrapped into one hearing expected to start next year.

Mr Goodwin, who was stripped of his knighthood, is expected to appear in court.

The other directors named in the case are former chairman Sir Tom McKillop, ex-finance chief Guy Whittaker and former investment banking boss Johnny Cameron.

RBS refused to comment on the cost. A spokesman said: ‘We believe we have strong defences to the claims that are being brought against the bank.’

Read more:queenie junior bridesmaid dresses