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Mystery of missing MacKenzie millions GETHIN CHAMBERLAIN CHIEF NEWS CORRESPONDENT 10 June 2006, The Scotsman HE WAS revealed this week as the perpetrator of Scotland's biggest-ever banking fraud. Yet friends of Donald MacKenzie find it hard to believe that the quiet man with a "nondescript" lifestyle could really have embezzled GBP 21 million from his employer, the Royal Bank of Scotland - and no-one seems to have any idea why. Asked to recall anything remotely interesting about his personal life, the best anyone could come up with was that his wedding rounded off with a chorus of New York, New York. He was certainly not a high-roller or a man to throw money about. One former friend said the 45-year-old business banker would make sure he turned up late at events to avoid buying a round of drinks. It was a complete shock to those who knew MacKenzie when police raided his modest Edinburgh home two years ago and detained him on suspicion of swindling the Royal Bank out of GBP 21 million. Anyone else might have indulged themselves a little - a new car, perhaps, a house in the country, a few holidays in exotic locations. But not MacKenzie. Although his legitimate earnings amounted to a healthy GBP 53,268 a year, he contented himself with a pleasant but unprepossessing house in a quiet neighbourhood and a light blue Ford Focus, which remains parked outside in the street. His wife still shuttles the children - aged six and three - about in a gold-coloured Toyota Yaris. Yet over a five-year period, MacKenzie was responsible for moving around GBP 69 million of the Royal Bank's money, nearly GBP 50 million of which he used to cover the tracks of his fraudulent transactions. The question everyone wants to answer is simple: why did he do it and what did he do with the money? If the Royal Bank knows the truth, it is not saying. It refuses to talk about the case in public or offer any explanation about how he got away with it. Bank insiders say even behind closed doors, the name Donald MacKenzie is rarely uttered, such is the embarrassment felt by executives at having been so thoroughly taken in by a man they regarded as one of their highest fliers. "They can't bear to mention his name," one employee said of a man who was named Business Manager of the Year for 2002, 2003 and 2004 for the volume of business he brought in to the bank's flagship branch in Princes Street, Edinburgh. MacKenzie himself is not talking. The police who raided his home found GBP 7,900 stashed in a briefcase in his garage. All he will say about the rest of the money is that he wanted to meet customers' expectations. A senior officer familiar with the case surmised that MacKenzie wanted to impress business people he dealt with, and did not know how to stop. To some, he offered loans to which they should not have been entitled, concealing his actions using a system which fooled the bank's business lending unit and other purported customers. ScottishPower, Oloroso restaurant and the Balmoral Hotel were some of the big-name businesses who - while innocent of any involvement - found their names used to further his scheme. "I think he just got carried away with being the big man," one officer said. "He hung around with business people and they said things like they needed GBP 100,000 today and he would agree to it. Everyone thought he was a great fixer." But the more loans MacKenzie arranged, the harder it became to cover his tracks. He started taking money from the bank to make the payments, trying, as the officer described, to be "a flexible friend". The police were as puzzled as anyone by what MacKenzie was getting out of it. "He didn't seem to benefit in any real sense," one officer said. "There was no foreign villa or first-class flights. I think he used a bit to pay bills but not on any grand scale. Everyone who knew him thought he was an upstanding guy." If the police were bemused, his friends and neighbours were astonished. MacKenzie moved his family to Belgrave Gardens in Corstorphine in 2003, buying the two-bedroom house for GBP 231,273. Neighbours described him as quiet and said he would go out of his way to avoid contact. "He used to try to avoid you," one said. "He would duck down and pretend to be pulling out a weed rather than say anything." Friends said "careful" would be the kindest way of describing MacKenzie's attitude to spending. One said: "For our silver wedding he presented us with a silver vase worth about GBP 15. That was the only time we received anything from him." MacKenzie was born in 1961, the son of George and Christina MacKenzie. He was brought up in the village of Cellardyke - scene earlier this year of Britain's first confirmed bird flu case - along with his sister Morag, born three years later. "Donald came from a highly respected family in this town," a friend explained. "His father was a World War Two hero who was captured in Germany." George MacKenzie, an RAF officer, went on to sit on the community council. He and his wife were pillars of the local community and devout churchgoers. "His mother is the sweetest person you can imagine," a school friend said. "And his sister is lovely, too. When all this became public knowledge they were devastated." According to friends, Morag and Christina were too ashamed to show their faces in public and "didn't go to church for a long time". At Waid Academy in Anstruther, MacKenzie made little impact. "Nobody knew much about Donald. He didn't seem to have any hobbies or anything," said someone who knew him at the time. "There were people in the class who were clever and you thought would succeed; Donald was just non-descript." After leaving school, MacKenzie joined the Royal Bank of Scotland as a teenager. Colleagues described him as "very, very good" at his job. He worked at branches in Fife and Tayside before moving to the Princes Street bank, where he met his future wife Margaret. Friends were unaware of the romance until the wedding was announced. "We didn't even know he was going out with anybody," one guest said. The couple wed at Balbirnie House Hotel in Markinch Village, Fife, in 1998. "We were invited to his wedding but it wasn't a huge affair," the guest said. "There were about 100 people there but there was no evidence he was spending the money." Out of the GBP 21 million total, the only money the police were able to prove conclusively had ended up in MacKenzie's hands was a mere GBP 37,170. He used that to pay personal bills - the smallest an GBP 11.26 electricity bill and the largest a GBP 6,547 credit card settlement - and those of Waid Academy FP Rugby Club, where he was treasurer for 15 years. Rugby was MacKenzie's one passion, but he was an unconventional treasurer. "We would say, 'That's Donald not balanced the books again'," one friend from the club said. "People used to say it was ridiculous that he never balanced the books. I just thought it was incredible. "He didn't present the accounts and the committee was losing money because to get grants to survive you have to present the accounts." The friend said that the lack of grants made life so difficult for the club that MacKenzie must have decided to try to make good the shortfall in funds using money from the bank. "I think he put in the money because he felt bad about it," he said. The club had no inkling of what was happening with its finances until the police started asking questions. Like everyone else, his friends remain mystified by what he did with the money. "I never heard anyone who said Donald had treated them to a round of drinks," said one. "Donald was the sort of person who would turn up at the end of the rugby club AGM just to avoid buying a round." His family appear to have fared no better: "We don't know where the money went but it was certainly not to his family," a friend said. "When his father died, his mother downsized to a smaller house and so did his sister." MacKenzie is now in jail awaiting sentencing. The bank is still trying to claw back its missing millions. And for the time being, mystery remains about where the money went, and why. "I don't think he's a bad person," one friend said yesterday, "just very, very secretive."
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