British prosecutors from the Serious Fraud Office have filed criminal charges against Barclays and four former bank executives.
The charges stem from allegedly false representation over investment in the bank by Qatar’s sovereign wealth fund during the economic crisis of 2008. Former CEO John Varley, former senior investment banker Roger Jenkins, Thomas Kalaris, a former chief executive of Barclays’ wealth division, and Richard Boath, Barclays’ former European head of financial investments, have been charged with conspiracy to commit fraud in a June 2008 capital raising. Varley and Jenkins have been charged with the same offense in an October 2008 capital raising and with providing unlawful financial assistance.
This marks the first time criminal charges related to the financial crisis have been brought against a UK bank.
How the Qatar arrangement worked was that Barclays advanced a £2 billion loan to Qatar and paid £332 million to Qatar Holdings for “advisory services.” Following that outlay by Barclays, Qatar Holdings lent £12 billion to Barclays. The implication is that there was a “money-go-round” at work, in which Barclays was handing Qatar some of the money it was using to support Barclays.
Ultimately, the funds from Qatar allowed Barclays to avoid a government bailout—and the extensive oversight and scrutiny of executive salaries that would most likely ensue.
“As one might expect in the challenging circumstances of 2008, Mr. Jenkins sought and received both internal and external legal advice on each and every topic covered by the SFO’s accusations,” Brad Kaufman, a securities litigation attorney from U.S. firm Greenberg Traurig, told the BBC.
Boath, who had taken the bank to an employment tribunal on grounds of unlawful dismissal, said in a statement, “The SFO’s decision to charge me is based on a false understanding of my role and the facts. I was not a decision-maker and had no control over what the bank did in 2008.”
This isn’t the first time Barclays has been in trouble.
In 2013, the UK’s Financial Conduct Authority proposed fining Barclays £50 million over issues related to its disclosure of the £332 million “advisory services” payments to Qatari investors in 2008. The FCA put its case on hold pending the outcome of the criminal investigation by the Serious Fraud Office.
In December of 2016, Barclays was accused by a U.S. prosecutor of defrauding investors who bought mortgage securities from the bank.
In late 2015, Barclays received a record UK fine for trying to keep a 2011-2012 deal with super-rich clients secret.
More recently, current CEO Jes Staley had his pay cut after he tried to unmask a whistleblower.
Varley, Jenkins, Kalaris, and Boath will appear in court on July 3 to defend themselves. The maximum penalty for a criminal fraud charge is 10 years in jail.
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