TAXPAYERS have paid almost £500,000 in legal fees to defend disgraced former bank boss Fred Goodwin in a case which has not even come to court yet.

Law firms representing four former directors of Royal Bank of Scotland have already racked up £400,000 in defence costs over a lawsuit brought by shareholders.

And if the case does reach the courts, the final bill is expected to total tens of millions of pounds.

Mr Goodwin’s legal fees are being paid by the bank – which is 82 per cent owned by the state – despite the fact he receives a £342,500-a-year pension from RBS.

It means public funds are effectively being used to defend bosses who led the bank to the biggest state bail-out in British corporate history.

The scale of the costs have provoked fury. Labour MP John Mann said: “This is a disgrace. It’s a staggering amount of money and will only climb higher.

“It shouldn’t be happening, especially when the taxpayer owns the bank.”

Banking experts have said it is impossible to estimate how much the eventual cost of the case might be. But RBS has previously said it could total a massive £42 million. The lawsuit is being brought by the RBS Shareholder Action Group over RBS’s appeal to investors in 2008 to spend £12 billion on buying new shares to help the bank fund new deals.

Leading City law firm Herbert Smith is representing RBS and the former directors, but other firms are also understood to have been drafted in.

There are four separate cases being pursued against RBS, but they are expected to be wrapped into one hearing which is due to start next year.

Mr Goodwin, who was RBS chief executive from 2001 until 2009, was stripped of his knighthood in 2012.

The others named in the lawsuit are former chairman Sir Tom McKillop, ex-finance chief Guy Whittaker and former investment banking boss Johnny Cameron.

An RBS spokesman said: “We believe we have strong defences to the claims that are being brought against the bank.”