Commentary: Tom Frost's long haul draws to close

It has been a long haul for Tom Frost, the deputy chairman of National Westminster Bank. He has now heard that three Department of Trade and Industry inspectors have cleared him of culpability in the Blue Arrow affair after an eight-month inquiry, though he will have to wait a few weeks longer before Michael Heseltine, President of the Board of Trade, releases their report.

The inspectors were appointed after Lord Alexander, chairman of NatWest, suggested to the Government that there should be a new inquiry into the aftermath of the Blue Arrow rights issue in 1987, when the market was misled about the results. This followed claims that Mr Frost had concealed documents from the inspectors and that he had been implicated in a cover-up.

The original inspectors, Michael Crystal QC and David Spence, of the chartered accountants Grant Thornton, were joined in the second inquiry by Victor Temple, a barrister. It soon became clear that they were widening their inquiry beyond Mr Frost's role to look at the wider background to the inquiry and the prosecutions and acquittals that followed.

After all, the first report had put much of the blame on three other NatWest directors, who were forced to resign. But the Serious Fraud Office later prosecuted a quite separate set of people whose roles were glossed over or hardly mentioned by the inspectors.

There was a lot missing from that first report, and at the very least the inspectors are bound to explain the discrepancies and make it clear where the information dug up by the SFO changes their own conclusions.

There could even be some cheering New Year reading for Charles Green, Terry Green and John Plaistow, the three NatWest directors who resigned because they were hammered in the inspectors' first report.

It was hard to see the sins of the threesome as anything more than omission, and at worst an inability to grasp what was going on in a securities business with which they were unfamiliar. A failure to act does matter where senior directors are concerned, but in the context of a report that produced half the story they took far too much of the original stick. The inspectors owe it to the three to put their role into a fairer context.

Mr Frost was almost full-time on the second inspectors' inquiry, so in practical terms it was sensible to move him upstairs to deputy chairman from chief executive while he worked on the case. Given that he has been cleared, this seems unfair, though there was little alternative. However, it has hardly nipped his career in the bud, since he is due to retire next summer. It also allowed NatWest to make a new management start after four horrible years by bringing in a youthful team under the new chief executive, Derek Wanless.

The question remains whether Lord Alexander should have asked the Government to embark on the second inquiry at all, given that he has been the toughest critic of the DTI inspection procedure, because of the unfettered way inspectors blame and condemn. (Robert Maxwell said the same two decades ago.) Lord Alexander is right that there is room for more checks and balances in the procedure to safeguard legal rights. But in this case he may have had no alternative: there is a strong suspicion the DTI would have launched the second inquiry anyway.