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An action group of Northern Rock shareholders is mounting a legal challenge against the government to obtain 'fair recompense' for the compulsory purchase of shares, claiming that their human rights have been violated.
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The action is being organised by the UK Shareholders Association (UKSA), which claims to represent a group of 7,000 private shareholders. In a statement, UKSA accused the government of "rigging the independent valuation" for compensation terms through its decision to nationalise the stricken bank.
This means Northern Rock will be valued on the basis that it was "unable to continue as a going concern". UKSA argues that a private sector solution could have allowed the company to recover and pay its debts, in which case, the compensation offered would have been far more than the rumoured 5p-a-share. It believes a figure "more like £5 than 5 pence" should apply.
"We consider the valuation approach to be unlawful, immoral and unethical and we believe that the government should not gain by being able to purchase the company cheaply as a result of its own actions," said Roger Lawson, chairman of the action group and director of UKSA. The law firm Edwin Coe, which acted in the Railtrack shareholders dispute, is representing the group.
The fact that the Treasury is to appoint the valuer cuts no ice with the protestors. "It is not natural justice that the buyer of any business should dictate the terms of reference for the determination of the purchase price," Mr Lawson said.
He estimates there are over 150,000 private individuals who have been affected by this matter. "We are therefore asking everyone who was a shareholder in Northern Rock to register their interest in this legal challenge and contribute a minimum of £25."
Meanwhile, Northern Rock's largest shareholders - hedge funds RAB Capital and SRM Global - plus institutional investor Legal & General, are thought to be mounting their own legal challenge for compensation under European Law.
You can find out more about the UKSA campaign at the UKSA website.
(This does not constitute endorsement of the campaign; we are somewhat sceptical of its chances)
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