EXTRAORDINARY new details of the extravagance of Sir Fred Goodwin’s reign at the Royal Bank of Scotland have been revealed by a whistleblower.

An RBS insider claims the disgraced former chief executive squandered vast sums empire-building and indulging his personal tastes as the bank ran up huge losses.

The well-placed source has told how the bank allegedly:

- Redecorated the lobby outside Goodwin’s office with wallpaper costing £1,000 a roll because someone had made a tiny stain on one surface.
- Spent £5.3m lavishly refurbishing a grade A listed building – styled “Sir Fred’s Pleasure Dome” by staff – that was barely used.
- Paid out £100,000 a month on part-time chauffeurs.
- Flew fruit in daily from Paris and upbraided staff about “rogue biscuits” when pink wafers were included with other boardroom snacks.
- Twice changed £100-a-square yard carpeting in two vast boardrooms because Goodwin “didn’t like the shade of amber”.

The whistleblower’s claims, which are not being denied by the bank, will stoke public outrage at the scale of Goodwin’s £700,000-a-year pension. They are likely to be of significant interest to the government, which has been forced to use taxpayers’ money to prop up the bank, in its fight to claw back the cash.

Coming after reports, at the weekend, denied by RBS, that Goodwin failed to inform the board of the bank’s level of exposure to “toxic” debt, they will fuel mounting speculation at Westminster that the bank’s auditors could be sued by the government or shareholders for failing to stop its spending abuses.

Last night, Vince Cable, the deputy leader of the Liberal Democrats, labelled the waste “sickening greed at savers’ and shareholders’ expense” and attacked the Financial Services Authority (FSA) for failing to stop the practices.

The whistleblower, who recently left the bank to take up another role, was moved to speak out by the misery of colleagues made redundant as a result of RBS’s near-collapse.

In e-mail correspondence with Cable, and in an interview with The Sunday Times, the individual revealed the lengths staff went to to cater to Goodwin’s exacting demands.

“You were told never to question anything the executive wanted. ‘If they want; they get’ was commonly known. If the halibut cost £38 a pound and they wanted the halibut, they got the halibut,” the source said.

The source claims that RBS, which was saved from bankruptcy by the government last autumn and has since reported record losses of £24 billion for last year, spent more than £5m refurbishing an 18th-century building in Edinburgh’s St Andrew Square adjacent to its flagship branch in 2005 “entirely and specifically to cater for Sir Fred’s hospitality use” and to prevent any competitor moving in. “The carpet throughout the building (acres of top quality hugely expensive carpet) [was] changed, some of it twice, because Sir Fred didn’t like the shade of amber,” said the whistleblower. “The building was known variously as FAG End [Goodwin’s initials] and Sir Fred’s Pleasure Dome. The only executives permitted to also use it were on a particular list, sanctioned directly by Sir Fred. Mere mortals were not allowed to hold meetings or lunches here. I believe in about two years he must have used it half a dozen times, if that.”

The work was carried out by an Edinburgh firm, Michael Laird Architects, whose web-site describes how the project, which was completed in December 2006, involved installing a “state-of-the-art executive meeting and dining facility, including a subterranean kitchen serving several RBS properties”.

At RBS’s former headquarters, also in St Andrew Square, the whistleblower said that a lobby was redecorated with watered silk wallpaper after a cleaner accidentally made a small blemish with brass polish on the wall near Goodwin’s office.

“We had to completely strip back and repaper the whole lobby,” the source writes, adding that the handpainted wallpaper was reputed to have costed “£1,058 per roll”.

During dinner functions, the source claims, an engineer was kept on standby late into the night solely to switch off the fire alarms when executives wanted to smoke.

No expense was spared when it came to hospitality, using suppliers hundreds of miles away and ferrying staff long distances when personnel were available locally. Some 300 hospitality staff, including chefs and sous chefs, were allegedly available to cater for Goodwin and his closest colleagues in Edinburgh alone.

“The fruit was flown in [to Edinburgh] on a daily basis from Paris for a long period. Frank Yorke, (Yorkes Butchers), being a friend of Sir Fred’s, supplied all the meat. They are based in Dundee — can you imagine the distribution costs? And they could charge what they liked.”

Staff lived in terror of invoking the wrath of Goodwin and his colleagues. On one occasion, catering staff were sent an e-mail from senior managers warning that incorrect presentation of tea and biscuits was a disciplinary offence. Headed “Rogue Biscuits”, it railed about the mistaken inclusion of pink wafers in a biscuit selection for executives’ afternoon tea.

A worker who toppled off a ladder while cleaning windows in Goodwin’s office, breaking a small model aeroplane as he fell, received little sympathy from RBS high command. Despite his having written a note of apology to Goodwin, staff simply “went into panic mode” over how to fix the toy.

The whistleblower told how RBS’s top chefs were sent on a 250-mile round trip from Edinburgh to Aberdeen simply to provide “stovies and pies” for executives after an international rugby match, while Goodwin’s attitude towards his own travel plans is also seen in a fresh light. When flying into Edinburgh airport in his private Falcon 900EX jet – which had the personalised registration RBSG (Royal Bank of Scotland Goodwin) – he “didn’t want to walk far” so allegedly ordered the bank to buy four executive car parking spaces nearby. A spokesman said Goodwin could not comment because of a confidentiality agreement.

The whistleblower also claims that 24-hour manned security was ordered at Goodwin’s £3m Edinburgh home at the bank’s expense after children broke into his garden and played on the swings while he was on holiday.

Cable has sent some of the whistleblower’s account to the FSA, saying it raises “fundamental questions” about whether RBS’s non-executive directors, and auditors, Deloitte, were doing their jobs properly.

Matthew Oakeshott, the Lib Dem Treasury spokesman, said the profligacy had “chilling echoes of Enron”.

“This saga of waste and greed would shame a medieval monarch. Forget ‘Sir Fred’ – he was playing King Frederick of Scotland, with his auditors and non-executive directors as well-fed lapdogs round the throne,” he said.

A spokesman for RBS said: “Those who were responsible for RBS’s problems have taken accountability for them. Everyone at RBS is now focused firmly on the future.”

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