It is hard to know how to apportion blame for the fiasco at Mitchells & Butlers. Ultimately, the board has rightly carried the can, with Karim Naffah, the finance director, paying with his job and all executive bonuses scrapped but the outside advisers have hardly covered themselves in glory. It would be too harsh to accuse the M&B board of being patsies but they appear to have been financially naive. It would be too harsh to accuse the advisers of being self-serving but they don't seem to have bent over backwards to work in the best interests of their client.

The hedge transaction at the heart of this horror story was in effect an insurance policy demanded last summer by the banks, Citigroup, Royal Bank of Scotland and Barclays, as a condition of bankrolling a huge sale-and-leaseback of the group's pubs. The banks walked away from that deal at the last minute, pleading a material adverse change, but by then the hedge had been put in place, totally unnecessarily. Without the corresponding property deal, it was not a hedge at all but a giant open-ended bet.

The company and its advisers made two errors. First they omitted somehow to link the two contracts, making the hedge conditional on the property sale. Given the skill and sophistication of the City's investment bankers, such an obvious safeguard was surely not impossible? The failure to insist on either both deals, or neither, was fatal.

Second, the Mitchells board decided to let the bet run, in the forlorn hope that the property deal could still be resurrected. The group behind the Sizzling Pub Co was so enchanted by the sizzling value enhancement promised by the prospective deal that it failed to notice there was no sausage in the pan, nor ever likely to be. The advisers seem to have encouraged Mitchells in this view.

The role of Citigroup seems to have been particularly stretched. As well as offering to finance the deal, it was the main investment bank adviser to Mitchells and one of the main counter-parties on the other side of the hedge. No doubt it handled these conflicts properly. Nevertheless, its client seems never to have been discouraged from entering into a deeply flawed transaction, one which stood to benefit Citigroup three times over. KPMG, the independent debt adviser, appears to have done nothing to prevent the fatal step either.

The explanation that no one could have foreseen the credit crunch won't wash. It was just such an unlikely eventuality that the bankers were insisting the company insure against in the first place.

Mitchells has been a loyal client of Citigroup for many years and until this episode has been served well. But it will be a miracle if the relationship can survive this disaster.

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