Barclays directors arrested after SFO review of 2008 Qatar rescue

23 June 2017

Editor

EU regulation

The UK's Serious Fraud Office (SFO) has charged the banking group Barclays and four former executives with conspiracy to commit fraud and unlawful financial assistance given to the Qatar government when it provided funding during the 2008 financial crisis. This is the first time a bank in the UK has been charged with any offences relating to the crisis.

The SFO has been conducting a criminal investigation into Barclays and its capital raising arrangements with Qatar Holding and Challenger Universal in June and October 2008 since 2012. The  SFO said its investigation also centred on a US$3 billion loan facility made available from Barclays to the State of Qatar acting through the Ministry of Economy and Finance in November 2008.

The deal with Qatar was significant because it allowed Barclays to continue in business without the need for a taxpayer bailout from the UK government in 2008. The financial crisis was triggered by the bursting of the US property bubble which led to the growth in the default rate of subprime mortgages which then left some banks - which had invested heavily in this market through seemingly low-risk financial products - exposed. The large US bank Lehman Brothers collapsed in September 2008 while UK banks notably the Royal Bank of Scotland and Lloyds received taxpayer bailouts in what became a global banking crisis.

The SFO said it had brought fraud charges against Barclays, its former chief executive John Varley, Roger Jenkins its former executive chairman of investment banking and investment management in the Middle East and North Africa, Barclays Capital, Thomas Kalaris – former chief executive of Barclays Wealth and Investment Management and Richard Boath , former European head of financial institutions group, Barclays Capital. The charges relate to an alleged conspiracy to commit fraud by false representation in June 2008 and these were brought against Barclays, Varley, Jenkins, Kalaris and Boath. Barclays, Varley and Jenkins are also charged with conspiracy to commit fraud by false representation in relation to the October 2008 capital raising. Additionally Barclays, Varley and Jenkins were charged with unlawful financial assistance contrary to s151 of the Companies Act 1985.

The SFO said the defendants will appear before Westminster Magistrates’ Court on 3rd July 2017. Barclays said it was considering its position in relation to the announcement of the charges against the company.

The Financial Conduct Authority (FCA) had also been investigating the advisory services agreements agreed between Qatar and Barclays. The FCA stated: "We are pleased that this matter, which led to the stay of our own case, is now in the public domain. We welcome a fair and transparent hearing on the basis of the charges set out today by the SFO. We work closely with the SFO across a range of matters, in pursuit of our distinct objectives."

Barclays added: "The FCA issued warning notices in connection with its investigation into the advisory services agreements and the United States Department of Justice and the US Securities and Exchange Commission have also been conducting investigations relating to these same agreements. The FCA's investigation in relation to the advisory services agreements had been stayed in view of the SFO's investigation but that stay is currently lifted. Other authorities have also been kept informed of developments in these matters. Also, as previously disclosed, a civil claim has been served on Barclays Bank PLC by PCP Capital Partners LLP and PCP International Finance Limited in relation to the November 2008 capital raising, which Barclays Bank PLC is defending."

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