����ý

The Halifax Bank of Scotland fraud trial is highly unusual in that senior bankers are convicted of crimes, including fraud and hiding the proceeds of crime, in the boom of irresponsible lending ahead of the 2008 crash.

The victims were the taxpayer, small business customers of the bank, and HBOS shareholders.

The implications are serious because the board of HBOS, its successor Lloyds Banking Group, the FSA, the Serious Fraud Office, and the Treasury were alerted to allegations about HBOS Reading in 2007 but repeatedly failed to investigate.

Between 2002 and 2007, small business owners were transferred to HBOS' corporate division, headquartered at its Reading regional HQ at Beauclerc House, 3 Queen's Road, Reading and classified as 'high risk' - even where they had never missed a repayment.

The Head of the Bank's Impaired Assets Division, based in Reading, Lynden Scourfield would require business owners, as a condition of the bank's continued support, to appoint his favoured turnaround consultants Quayside Corporate Services (QCS), run by David Mills and Michael Bancroft.

QCS would then submit inflated business cases for additional finance - sometimes against the wishes of the owners - and HBOS, under Scourfield's influence, would extend further funds. Internal investigation reports from the bank in 2007, and seen by the ����ý, reveal that the bank had identified breaches of internal checks and balances by Scourfield.

"A series of control weaknesses are evident in bank systems and procedures which allowed limits to be processed in the Reading office without the necessary credit approval," said the report.

QCS would then siphon off money from the companies by invoicing the owners for very large fees. In exchange, QCS arranged for Scourfield to receive hundreds of thousands of pounds in cash, free trips to Barbados and Cannes, Rolex watches, drugs and prostitutes.

HBOS' money (ultimately bailed out by taxpayers) also financed a private jet company, which was lent more than £100m but never made a profit and failed to file accounts.

Corporate Jet Services, then based in Southampton, made little money but flew celebrities to Cannes, Monaco and back - including David and Victoria Beckham, Max Clifford and Jodie Kidd - and was also used to help purchase a yacht, Powder Monkey.

Many of the businesses were then asset stripped by QCS and either made bankrupt or sold for nominal amounts to companies often linked to Mills or Bancroft. The companies included a porn publisher, a fishing tackle business, and an environmental nappies business.

While HBOS (then Halifax Bank of Scotland until its takeover in 2008)) and its successor Lloyds Banking Group have sought to portray the activities of Mills, Bancroft, Scourfield and co as the work of fraudsters evading the bank's internal controls, did the bank miss opportunities to identify the fraud earlier?

Concerns were raised by bank customers back in 2007 and in 2009 ����ý Radio 4 broadcast a programme about some of the allegations.

This was followed by a in which MPs outlined claims of corrupt payments being made, including an occasion where a business was asked to "deliver a briefcase full of cash to Mr Scourfield to assist the loan".

The MP also gave details of "lurid stories of prostitutes being paid for from the funds of Quayside clients."

A key question is whether the fraudulent activity was known about higher up the bank.

It wasn't until 2010 that the police investigation began, which six years later culminated in the trial.

File on Four will have a special report about the case on ����ý Radio Four on Tuesday 31 January at 20:00.