£12m loan row bank boss and a spat over bus tycoonâ??s cash

[ian1964 10,761]

Boardroom battle after money used to help club

 

THE former bank boss at the centre of a £12 million loan row has fallen out with one of Scotlandâ??s richest men after using some of his money to prop up an ailing football team.

 

Gavin Masterton, the Dunfermline Athletic owner and former managing director of Bank of Scotland, has been frozen out of a legal services business he owns with Stagecoach tycoon Sir Brian Souter.

 

The Scottish Mail on Sunday understands the row centres on £400,000 transferred from the venture to the bank account of the Fife football club without Sir Brianâ??s permission.

 

Mr Masterton yesterday insisted he enjoys a â??strong working relationshipâ?? with the entrepreneur.

 

But it is understood Sir Brian was furious when he found out about the transfer and ordered Mr Masterton to repay the cash before forcing him off the companyâ??s board.

 

Last week The Scottish Mail on Sunday revealed how the Bank of Scotland agreed a £12 million loan deal to a company owned by Mr Masterton which allowed it to skip repayments for the next 35 years.

 

The disclosures come amid a financial crisis engulfing Mr Mastertonâ??s complex web of companies, with Dunfermline Athleticâ??s former managing director suing his ex-boss and creditors circling the club.

 

One insider said: â??The Souter situation is incredibly embarrassing for Gavin, especially as they go back to when he was running the bank, but it also shines a light on how he is running his businesses and the troubles facing the football club.â??

 

Sir Brian and Mr Masterton both have a stake in a legal services and executive search firm called First Scottish Group Limited.

 

Last summer £400,000 was transferred from First Scottish to Dunfermline Athletic without Sir Brianâ??s permission. Upon learning of the move, Sir Brian is understood to have ordered Mr Masterton and the then First Scottish managing director John Yorkston â?? who is also chairman of Dunfermline Athletic â?? to repay the cash and then forced them both off the companyâ??s board.

 

Documents lodged at Companies House show both Mr Yorkston and Mr Masterton â?? who between them own the majority of shares in First Scottish Group Limited â?? both resigned as directors of First Scottish in September last year.

 

An associate of Sir Brian was appointed to replace them.

 

The problems for Mr Masterton were mounting up last autumn when seven directors â?? owed more than £500,000 from Dunfermline Athletic â?? quit the football club as the true extent of the clubâ??s financial difficulties was beginning to emerge.

 

The former directors wanted to take Dunfermline Athletic out of the group of companies owned by Mr Masterton but he refused.

 

It is now understood some of those former directors and others connected to the club are considering calling in the â??softâ?? loans made to the club which have not been repaid.

 

One of those who left was Bill Hodgins, the clubâ??s former chief executive and a former director for a number of Mr Mastertonâ??s companies. The Scottish Mail on Sunday can reveal that Mr Hodgins is now planning to sue his former boss.

 

A compensation action has been raised at the Court of Session against Mr Mastertonâ??s Charlestown Holdings Ltd for alleged â??loss of officeâ?? and missing pension payments.

 

A statement issued by Mr Masterton said that Mr Yorkston had stood down from First Scottish on health grounds. It added: â??Mr Masterton continues to enjoy a strong working relationship with Sir Brian Souter.

 

â??The £400,000 was a series of intergroup transactions which were repaid as agreed. With regard to the Court of Session action, Mr Hodgins resigned without notice. This action is without merit and will be defended vigorously.â??

 

A spokesman for Sir Brian said the businessman did not want to make any comment.

 

 

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