Former Celtic director Dominic Keane was yesterday named as a key figure in a multi-million pound legal dispute between his brother, his brother's business partner and Scotland's largest bank.

Self-made millionaires Edmund Keane and Jimmy Jones are suing the Royal Bank of Scotland (RBS) over claims that it lost their £10m fortune.

Yesterday the Court of Session in Edinburgh heard that Dominic Keane, now 55, was the pair's bank manager at RBS when they agreed to grant him power of attorney in 1990 after they sold their carpet empire, Colonel Gees, to begin a new life overseas.

All appeared to be well until three-and-a-half years ago when Mr Jones was told by a private school which his three sons attended that a cheque for their fees bounced.

At the same time, Edmund Keane received a letter from RBS saying he owed £2.5m.

When both men contacted the bank to ask what was happening they discovered that instead of having millions of pounds safe in their accounts, they were jointly liable for millions of pounds worth of debt.

It was revealed in court yesterday that the men's money had been transferred into different accounts opened by Dominic Keane, which lawyers for Edmund Keane and Jimmy Jones claimed the pair knew nothing about.

The bank is refusing to repay the money, claiming that the power of attorney agreements provided "sufficient authorisation" for Dominic Keane to open and operate such accounts in the names of both men.

But lawyers for Edmund Keane, 60, and Mr Jones, 54, the pursuers in the action, denied that claim yesterday.

They argued that the bank should not have allowed Dominic Keane to open and operate additional accounts when it held no mandate or written instructions from either Dominic Keane or the pursuers in relation to the accounts, and therefore had no right to transfer funds as it has done.

At the preliminary hearing yesterday Lord Angus Glennie ordered that a full legal debate should focus on the "points of principle" surrounding that argument, which is disputed by RBS.

Edmund Keane and Mr Jones, who both now live in Glasgow, have lost around £9m and £1m respectively. They are also now jointly more than £2.5m in debt.

Jonathan Brown, advocate, representing Mr Jones and Edmund Keane, said: "The pursuers say there was no contract entered into by themselves or by Dominic Keane on their behalf."

Heriot Currie QC, representing RBS, warned that it would be "time consuming and expensive" to trawl through the bank's records to see exactly how instructions from Dominic Keane were given.

Neither Mr Jones nor Edmund Keane were in court yesterday. Both are expected to attend the full debate which is due to take place later this month.

A source close to the men told The Herald: "They were getting their normal bank statements for their accounts, but they knew nothing about these other accounts until they found out that they were not only broke, but also in debt to more than £2.5m.

"Jimmy Jones found out when his children's school fees cheque bounced. He thought it was a mistake but when he phoned the bank he was told he would be getting a letter.

"Edmund also got a letter, but when he rang the bank just said see your lawyer'. They wouldn't even meet with him. He has banked with RBS for 40 years.

"The irony is that the reason they kept their money in special deposit bank accounts at RBS was that they had made their fortune and they wanted to keep their money safe."

Earlier this week Dominic Keane appeared in court in a separate case where he was charged in relation to a multi-million pound fraud.

That hearing, held in private at Dundee Sheriff Court, concerns allegations that Dominic Keane was behind a £2.3m fraud scheme while working at RBS. Alleged victims of the fraud include fellow former Celtic board member and friend William Haughey.