Shareholder group, Lloyds Action Now, is claiming former business secretary, Lord Peter Mandelson, withheld evidence in the build up to the merger of HBOS and Lloyds TSB.
The group, which was established in 2009, claim their savings were wiped out following the controversial merger, which took place at the height of the financial crisis.
The group also claims investors were lured into voting for the takeover, while not being provided with all the relevant information – particularly in respect to HBOS’ finances.
The action group is accusing Lord Mandelson of “deliberately withholding important evidence” during a court case, claiming that the former business secretary failed to disclose in documents submitted to a Competition Appeals Tribunal in Autumn 2008 and later to the Court of Session how HBOS had been secretly provided with an emergency £25.4 billion loan from the Bank of England.
Failure to disclose the loan, which according to LAN’s lawyers argue constituted illegal state aid, would have completely changed the outcome of the case and the merger would have been declared illegal.
Last week, LAN lodged a claim for compensation in the High Court with the Bank of England and the Treasury.
The group says up to 800,000 shareholders at the time of the merger lost a total of £2 billion between them.
A spokesperson for LAN, Adrian Lithgow, said: ”The evidence submitted by Lord Mandelson was the subject of a secrecy order which means that no-one who was a party to the case can reveal what it contained.
“That does not prevent them from saying what was not in the secret dossier, and our sources are adamant there was no mention of the £25.4billion. The implications are astounding,” he added.