James Burton For The Daily Mail

A Judge has blocked an 11th-hour bid to keep documents revealing Labour’s support for the disastrous takeover of failing bank HBOS secret.

In a last-minute appeal the Government asked Mr Justice Norris in the High Court to keep under wraps a dossier on HBOS’s toxic 2008 acquisition by Lloyds.

The HBOS papers are thought to be crucial to the case of 6,000 Lloyds investors who are taking the bank to court in a £700m lawsuit due to start today.

But after submissions from the Mail and other papers he refused the Government request, saying the documents will play a key role in a civil case brought by shareholders who claim the deal cost them millions of pounds.

The report should reveal to the public for the first time that for the first time, what was discussed by business minister Lord Mandelson in the run-up to the 2008 HBOS takeover

The report should reveal to the public for the first time that for the first time, what was discussed by business minister Lord Mandelson in the run-up to the 2008 HBOS takeover

The report should reveal to the public for the first time that for the first time, what was discussed by business minister Lord Mandelson in the run-up to the 2008 HBOS takeover

It means that, for the first time, the public may learn what was discussed by business minister Lord Mandelson (pictured) behind the scenes in the run-up to the takeover. Lloyds nearly collapsed after the deal and was saved with £20.5billion of public money.

The files set out discussions between the Treasury, the now-defunct watchdog, the Financial Services Authority, and the Bank of England over how to handle the crisis as the economy teetered on the brink of collapse. 

The Government argued that revealing the information would make civil servants less willing to be candid if they knew their discussions would be made public.

The ruling means many details may at last come out during the 14-week case. The documents are likely to be referred to during the questioning of former FSA boss Sir Hector Sants.

HBOS’s acquisition was rushed through without a full competition probe after then-Business Secretary Lord Mandelson said it was in the public interest.

The dossier is thought to include the Government’s view on the implications for financial services if the merger failed.

Publication could show how close HBOS came to collapse, and shed light on why ministers supported the deal.

The 6,000 shareholders claim they were misled about the facts of the deal in 2008 and their civil trial, which starts today, will dwell on a cocktail evening at Spencer House Palace in London when Prime Minister Gordon Brown is said to have given his backing to a takeover to Lloyds chairman Sir Victor Blank.

Lloyds is expected to argue a high level of information was revealed at the time of the takeover, including a warning that it needed emergency liquidity support. 

Its lawyers will also claim that the subsequent share price fall was due to the economic recession, not the HBOS deal.

Lloyds believes the claims to be heard have no merit.

 

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