Barclays Faces Fraud Charges Over 2008 Qatari Investment


Barclays PLC and its former chief govt, together with other ex-senior personnel of the lender, were charged with fraud with the aid of UK authorities over fundraising deals made with Qatari investors in 2008 which helped the financial institution avoid a government bailout.

The Serious Fraud Office stated Tuesday it has charged Barclays with two offenses of committing fraud through fake representation, and one offense of illegal financial help, contrary to the Companies Act 1985.

These are the primary criminal charges brought inside the UK towards a bank and its former senior executives when it comes to its movements in the course of the financial disaster.

One charge of fraud has been brought in opposition to the financial institution and four of its former executives, along with ex-CEO John Varley, who headed the lender from 2004 to 2011.

Also charged are Roger Jenkins, former govt chairman of funding banking & investment management in the Middle East & North Africa for Barclays Capital; Thomas Kalaris, former chief govt of Barclays Wealth & Investment Management; and Richard Booth, former European Head of Financial Institutions Group.

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This preliminary rate relates to a GBP4.50 billion capital raise in June 2008, with traders such as the Qatar Investment Authority.

Barclays, Varley, and Jenkins additionally face a 2nd fraud price when it comes to a similarly capital boost of GBP7.30 billion in October 2008, also primarily with Qatari traders.

The capital raises allowed Barclays to avoid the sort of authorities bailout received by way of its excessive street peers Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC in the midst of the economic crisis.

However, the fundraising has eventually been dogged via accusations that the bank hid elements of the deal designed to make the investment more attractive.

The fraud prices revolve round two “advisory provider agreements” worth GBP322.Zero million which Barclays agreed to pay the Qatar Investment Authority on the time of the funding and failed to reveal.

Barclays has already been hit with a GBP50.Zero million pleasant by using the UK’s Financial Conduct Authority in 2013 for a “reckless” failure to reveal the agreements. Barclays contested the pleasant and its project was put on keeping even as the SFO carried out its own research, with the stay now lifted.

The bank, Varley, and Jenkins also face an unlawful financial assistance fee over a USD3.00 billion loan which Barclays made to the nation of Qatar in November 2008. The bank has faced claims that the loan became used to finance the Qatari investment, suggesting Barclays essentially lent money to itself, which the bank has denied.

On Tuesday, Barclays stated it is “thinking about its alternatives” in relation to the fees and anticipating more element from the SFO. This consists of whether or not the regulator will bring fees in opposition to its working subsidiary Barclays Bank PLC in appreciate of the loan made to Qatar.

The defendants are because of seeing before Westminster Magistrates’ Court on July three.

The information additionally had little immediate impact on the bank’s share charge, with Barclays stock simply 0.Four% decrease at 206.00 pence Tuesday.

The case is every other high-profile lawsuit by the SFO, which Prime Minister Theresa May has pledged to merge with the National Crime Agency. The regulator reached a GBP671.0 million settlement with Rolls-Royce Holdings PLC in January over bribery and corruption costs and is currently investigating oil & fuel offerings company Petrofac Ltd.

A voluntary deferred prosecution deal of the sort reached by way of Rolls-Royce would allow Barclays to avoid a criminal prosecution.

However, the SFO has stressed that such agreements rely on the extent of co-operation obtained from the organization. Barclays only agreed handy over internal files relating to the fundraising in February 2016, having resisted the sort of pass given that the start of the investigation by the SFO in 2012, which may also leave the regulator unwilling to provide the financial institution and its former executives one of these way out.

In the meantime, Barclays also faces a GBP721.Zero million civil declare referring to the Qatari fundraising from PCP Capital Partners LLP and PCP International Finance Ltd, run by financier Amanda Staveley. PCP claims it became a potential investor inside the deal, rather than merely a guide, and therefore must have acquired comparable fees to the ones paid to Qatari traders.

City white-collar crime specialists had been drafted in because the Serious Fraud Office (SFO) nowadays (20 June) charged Barclays and four former executives with conspiracy to devote fraud, false representation and illegal economic help in arranging a £7.3bn Qatar investment deal at the height of the financial disaster – the primary such prosecution of a bank.

The SFO has charged former Barclays CEO John Varley, former senior investment banker Roger Jenkins, former chief government of Barclays’ wealth division Thomas Kalaris and ex-European head of economic establishments Richard Boath.

Barclays is represented with the aid of Willkie Farr & Gallagher, Jenkins by Brad Kaufman at Greenberg Traurig on the US facet and Jenkins by Herbert Smith Freehills within the UK, while former CEO Varley has advised Corker Binning.

Kalaris has instructed Steptoe & Johnson and Boath is represented by Michael O’Kane of Peters & Peters.

The defendants will seem before Westminster Magistrates Court on 3 July.

Barclays, Varley, Jenkins, Kalaris and Boath are charged with conspiracy to dedicate fraud through fake representation on the subject of the June 2008 capital raising under the Fraud Act 2006 and the Criminal Law Act 1977.

Barclays, Varley and Jenkins are one at a time charged with conspiracy to dedicate fraud with the aid of fake illustration on the subject of the October 2008 capital elevating, contrary to the Fraud Act 2006 and the Criminal Law Act 1977, and unlawful economic help opposite to the Companies Act 1985.

The choice is the primary crook prosecution against a UK bank and its former executives for his or her part in that crisis, almost 10 years on. It is five years because the SFO started out investigating the financial institution’s fundraising all through the 2008 financial disaster.

The costs get up from Barclays’ capital elevating arrangements with Qatar Holding and Challenger Universal in June and October 2008. They additionally relate to a $3bn mortgage facility made to be had to the State of Qatar acting through its ministry of financial system and finance in November 2008.

One City partner told Legal Business the truth that that is the first prosecution of a financial institution because of financial disaster manoeuvring is ‘shameful’ for the authorities. ‘It takes political self-control and assets to carry these instances and there appears there isn’t always a big quantity at the authorities aspect.’

‘The SFO’s life is underneath chance, and it’s far extremely underfunded. The authorities does not take the SFO seriously and does not put the right sources into it,’ he stated.

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On the SFO’s postpone in bringing the primary expenses so long after the occasion and since it released the probe, Claire Shaw of Keystone Law said the SFO turned into below political stress to come to a decision, a decade after the crash: ‘There is a wellknown feeling for the time being that we need to have expenses.’

The SFO delayed as it turned into anticipating witnesses and files from abroad to make certain it got over the crook threshold required, Shaw stated, adding that the SFO must ‘be careful earlier than making costs. In a case like this, you do not need the highlight of the arena shine on you which ones may additionally cause the case to collapse,’ she said.

White & Case London partner Jonathan Pickworth, however, countered that the choice to prosecute Barclays for its fundraising efforts ‘almost a decade in the past’ is no longer inside the public hobby. ‘Who does this punish and what reason does it serve? All the previous management crew moved on many years in the past. This will handiest harm the current shareholders and latest hardworking personnel.’

Barclays stated it was considering its role ‘in relation to these tendencies, because it awaits similarly details of the costs from the SFO. The SFO has informed Barclays that it has no longer made a decision as to whether or not it’s going to additionally convey costs in opposition to Barclays Bank in recognize of the loan’ facility made available to Qatar in November 2008.

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