HBOS took Farepak cash in knowledge company was heading for the brink The judge listed statements from City figures such as Oliver Hemsley, chief executive of broker Numis, David Farrow, then at ABN Amro and Alexander Garton, formerly of Hoare Govett, all of which were tainted in some way. The judge said he did not believe the witnesses were dishonest but they had not seen crucial pieces of evidence whilst others had been swamped with witness statements that ran to over 700 pages. The seven former directors including Sir Clive Thompson, former president of the CBI, are now expected to pursue the Department for Business for millions of pounds in costs. However Mr Justice Smith saved his most scathing criticism for HBOS's role in the collapse of Farepak. The bank was in talks with directors of the company and its parent group European Home Retail (EHR) for months before both businesses were put into administration. Both parties knew the companies did not have enough funds pay out Christmas savers at the end of the year. Despite this, the bank turned down repeated requests by the directors to safeguard new funds that were flowing into the company by placing them in a trust. HBOS had a policy of "playing hardball, of which it appeared to be proud," the judge said. By the middle of 2006 the bank was aware Farepak was heading for insolvency, it knew deposits, up to £10m of them, were continuing to be received and it knew these monies would only benefit HBOS, he said. "It is ironic that if the bank's reputation for playing hardball had been repeated by the Government two years later, HBOS would not be here and that is something else that HBOS might like to think about," Mr Justice Smith said. In a statement Lloyds Banking Group said it would not be claiming its £1m legal costs from what was left of creditors" funds in EHR, something it would have been entitled to. It also said it would consider whether to top up the £2m donation it has already made to the Farepak fund, as requested by Justice Smith.