Former Celtic director Dominic Keane is accused of ripping off his own brother in a multi-million-pound fraud, it emerged yesterday.

The Court of Session in Edinburgh heard that the former football director and bank manager secretly set up accounts in his brother Edmund Keane's name to carry out a 13-year fraud.

It is alleged that he used the hidden accounts to run up massive debts using the vast balance in his brother's genuine deposit account as security without his knowledge or permission. Dominic Keane is also accused of committing the same fraud against his brother's business partner, Jimmy Jones.

It is the latest revelation in a legal dispute in which self-made millionaires Edmund Keane and Mr Jones are suing the Royal Bank of Scotland (RBS), where Dominic Keane worked, over claims that it lost their £10m fortune.

Earlier this month at a preliminary hearing the court heard that the pair had agreed to grant power of attorney to Dominic Keane in 1990 when they moved overseas after selling off their carpet empire Colonel Gees.

They had no idea that all their money had gone until three and a half years ago when a cheque for Mr Jones's sons' private school fees bounced and both men were told that they were now more than £2.5m in debt.

Yesterday's allegation that Dominic Keane, who was his brother's bank manager at RBS when he was given power of attorney, spent the next 13 years committing a multi-million-pound fraud is part of a linked action (claiming negligence) being taken by Mr Jones and Edmund Keane against the bank.

Referring to that case, Michael Jones QC, lawyer for the two men, the pursuers, said yesterday: "It's averred that over the period of the next 13 years after being granted power of attorney...Dominic Keane carried out a fraud involving many millions of pounds, and he did that by creating accounts in the name of each of the pursuers, of which they knew nothing and somehow, and we don't know how, arranged for money to be paid out of those accounts thereby creating debit balances against the security of deposit accounts which had been opened by each of the pursuers and in which substantial sums lay in credit."

The hearing yesterday was ordered to debate legal arguments surrounding a dispute between the pursuers and RBS, the defenders, over whether the bank had the right to transfer funds to set off debts.

Lawyers for the pursuers claimed that RBS had no authority to do so because it had no mandate or written instructions. The bank had claimed that the power of attorney agreements provided "sufficient authorisation" for its action.

Yesterday the bank revealed that it also had specific instructions from Dominic Keane, now 55.

Paul Cullen QC, for RBS, said that the bank had received "a number of written instructions" from him and it was possible that there had also been verbal instructions.

Mr Cullen said: "Essentially what happened here was that Dominic Keane asked for the debit transactions to be made and the bank did so. The terms of the request are no more than Please make these debit entries'."

Lawyers for Edmund Keane, 60, and Mr Jones, 54, who were both in court with their wives, maintained that they had not seen any evidence of these instructions.

As a result Lord Angus Glennie said yesterday that RBS would have to provide proof, which could see bank officials called to give evidence if verbal instructions are relied upon by the bank to justify their actions.

He is due to decide today how best to proceed after hearing the views of lawyers for both sides.