How married Northern Rock chief enjoyed an affair with a junior employee as the bank headed for disaster

12 April 2012

Amanda Smithson from the Northern Rock's buy-to-let division was having an affair with boss Adam Applegarth as the company headed for collapse

Adam Applegarth, 45, who left his post as chief executive this month, had a secret relationship with Amanda Smithson from the company's buy-to-let division.

A senior source has told The Mail on Sunday that Mr Applegarth had admitted the affair after anonymous letters were sent to the bank's board and Mr Applegarth's wife Patricia last year, just as the bank was starting to implode.

The claims were put to Mr Applegarth in the presence of other directors. He initially denied them, but the source says he later privately admitted they were true.

Suspicion had already been aroused by Mr Applegarth's private visits to America up to six times a year, staying in the Four Seasons Hotel in Washington or New York.

An internal investigation found that on almost every occasion Ms Smithson had booked the same time off. And if it was ever suggested that he rearrange his holiday, Mr Applegarth would apparently become "touchy".

Mr Applegarth's position had already been weakened by his unpopularity at the top of the bank.

Ms Smithson, a glamorous brunette, was pictured in the company's staff magazine last year, when it covered a Moulin-Rouge-themed Christmas dinner dance attended by 525 "Northern Rockers".

The event was described as being full of tables "lavishly decorated with balloons, feathers, top hats, monocles and feather boas", with diners entertained by the Showgirl dance troupe.

Ms Smithson's £200,000 flat in the Wills Building, one of the most fashionable addresses in Newcastle, was purchased with the help of a Northern Rock mortgage. The Grade II listed building is close to both the city-centre nightlife and the company's head office in Gosforth.

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Former boss of Northern Rock Adam Applegarth was seeing the junior employee behind his wife's back

The anonymous letters - one of which went to Mrs Applegarth at the family's £2.5 million home in the village of Matfen, Northumberland - also made allegations about the abuse of company property during the course of the affair which have proved to be completely unfounded.

Northern Rock plunged into crisis under Mr Applegarth's command after the bank exposed itself to high-risk sub-prime mortgages in America. When the problem was revealed in September, it provoked a run on deposits and queues outside branches across the country as savers withdrew their money.

The company needed an emergency loan from the Bank of England to survive and Chancellor Alistair Darling was forced to step in to guarantee customers' deposits.

Mr Applegarth, who earned a total package of £1.4million last year, has left the company with a pension pot worth £2.2million.

"There were a number of reasons for suspecting they were having an affair," the source said. "She had quite a lowly job, but she was always wearing expensive clothes and driving an expensive car. And whenever Adam flew off to America she would book leave at the same time.

"He had use of a private jet, but I don't think they were ever daft enough to fly out together."

Ms Smithson was unavailable for comment last night. Mr Applegarth was made aware of the allegations four weeks ago but has not commented.

Northern Rock said it would not comment on personal matters relating to its employees.

Anonymous letters revealing the affair were sent to Patricia, Adam's wife, at the couple's £2m home, and to Northern Rock's board

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