Bribes of bully Lord Sleaze

The Business Secretary sent a threatening letter to the group, demanding they drop their challenge or face being sued by the Government.

In what is being seen as a financial sweetener, he told the Merger Action Group (MAG) the taxpayer would pick up their £50,000 legal fees so far if they backed down.

And in a stark warning from his Department for Business, Enterprise and Regulatory Reform (BERR) he promised to pursue each of the six influential individuals – who include Dan Macdonald, chief executive of Macdonald estates – for the full legal costs of both sides if they continued their opposition to the Lloyds TSB deal.

The businessmen’s case will be heard by a tribunal of Britain’s top judges and lawyers sitting under Scots law in London tomorrow. 

They argue Lord Mandelson acted “unlawfully” by ignoring advice to refer the deal to the Competition Commission.

Last night, a cross-party group of MSPs set up to support the tycoons condemned the Labour peer’s “undemocratic bully-boy tactics”, and accused him of unleashing “Gordon Brown’s attack dogs”.

Independent Margo MacDonald said: “This latest move is intimidation. They are scared of losing and it looks for all the world like the abuse of governmental and state power.

“They may argue they are perfectly at liberty to do this but the judgment of anyone looking at this would be it is massively unfair and undemocratic.

“The question has to be asked: ‘Why is Lord Mandelson’s legal team behaving in this way and employing these outrageous bullying tactics?’”

Nationalist MSP Alex Neil, who has been a leading figure in the campaign against the takeover, added: “Prime Minister Gordon Brown should call off the ‘attack dogs’ because these kind of tactics offend our ideas of decency and fair play.”

A source close to First Minister Alex Salmond described the letter as “a weak move”.

He added: “There is a substantial case to answer about the behaviour of Lord Mandelson towards his responsibilities and the clear lack of the promised level playing field. We think the BERR has been badly spooked by Mr Justice Barling’s wise decision to hold the case under Scottish legal jurisdiction, despite the protestations and intense lobbying of the Treasury’s legal team.

“Lord Mandelson, whose conduct is under the closest scrutiny, would do well to leave the tribunal to determine the case instead of attempting to stack the deck yet again.”

The takeover threatens up to 40,000 jobs and critics believe it will result in branch closures, higher bank charges and huge loss to Scotland’s economy.

Gordon Brown promised to “rip up” competition laws to “save” HBOS, although that was before billions of pounds was pumped into the ailing banking system. A verdict is expected before HBOS shareholders vote on the takeover on Friday, although the losing side is almost certain to appeal.

The letter from Lord Mandelson’s lawyers is now expected to play a major role in MAG’s submission.

MAG is made up of Dan Macdonald, Tim Noble, of the Noble banking dynasty, international financier Peter De Vink, Malcolm Fraser, the leading Edinburgh architect, Mark Shaw, chief executive of the Hazledene property group, and David Alexander, chief executive of DJ Alexander, Scotland’s largest residential letting company.

The letter arrived at the offices of Brussels-based Scots barrister Ian Forrester, QC, on Friday lunchtime, inviting the group to withdraw by 5pm.

Spokesman Mr Fraser said yesterday: “The invitation was declined. We are committed to our case and in the public interest are determined to go ahead.”

Last night, a spokeswoman for Lord Mandelson said the offer was not a “threat”.

“The letter was intended to give the appellants a chance to save costs before pursuing their legal challenge further,” she said. “It was neither an ultimatum nor a threat to individual members.”

Ms MacDonald added she believed Labour’s real motivation in pursuing the takeover is a political attempt to weaken the SNP’s power base.