SFO charges Barclays Plc and four executives with fraud
20 Jun 2017

The Serious Fraud Office, the UK’s specialist enforcement agency for complex fraud and corruption, today charged Barclays Plc and four of the bank’s top executives with offences including conspiracy to commit fraud.

The executives charged are:

  • John Varley, Group Chief Executive of Barclays from 2004 to the end of 2010
  • Roger Jenkins, Executive Chairman of Investment Banking and Investment Management for the Middle East from 2008-09
  • Thomas Kalaris, Head of Barclays’ Wealth Management from 2005-13
  • Richard Boath, former European head of Barclays’ financial institutions group. As of November 2016 Boath was suing Barclays over pay, unfair dismissal and whistleblowing. He claims that the bank fired him as a result of information he disclosed to the SFO in 2014 about the Qatari fundraising

The four are the first senior bankers in the UK to face charges for events linked to the 2008 financial crisis. There is some irony in that they are being charged not for crashing their bank in the first place, but for alleged foul play in its recovery—but it is certainly better than nothing.

The charges relate to money Barclays raised from Qatar at the height of the crisis, an unexpected move that allowed it to avoid a taxpayer bailout. In two deals in June and October 2008, an arm of the Qatari sovereign wealth fund and other bodies invested nearly £12 billion in the bank. At the same time, Barclays made available to the Qatari government a US$3 billion loan facility, and paid more than £300 million in ‘advisory service agreements’ (ASAs).

The SFO has been investigating the fundraising for five years, and the ASA payments—whether or not they were honest and properly disclosed—appear to be a core element of the case. In addition, it seems that the source of funds for the loan to Qatar may have been misrepresented: the money may have come from funds Barclays had supposedly set aside to safeguard its own operations. Senior executives at Barclays were strongly incentivised to avoid the nationalisation of the bank, which would have resulted in limitations on pay and bonuses and, most likely, a poor deal for shareholders. It is possible they behaved recklessly in light of this.

The decision to charge Barclays has been postponed several times this year. Described as “the most significant charging decision for the SFO in recent times” by Sarah Wallace of Irwin Mitchell Solicitors, its announcement today may signal that the SFO is feeling more confident about its future. The Conservative manifesto for the recent general election pledged to merge the SFO with the larger National Crime Agency, but much of that manifesto is likely to be scrapped in light of the Conservatives’ failure to hold on to their parliamentary majority. Nonetheless, this is a high risk move for the SFO: if the charges fail to stick it will find itself far more vulnerable to criticism.

According to its press release, the SFO charges are as follows:

  • Conspiracy to commit fraud by false representation in relation to the June 2008 capital raising, contrary to s1 and s2 of the Fraud Act 2006 and s1(1) of the Criminal Law Act 1977 – Barclays Plc, John Varley, Roger Jenkins, Thomas Kalaris and Richard Boath.
  • Conspiracy to commit fraud by false representation in relation to the October 2008 capital raising, contrary to s1 and s2 of the Fraud Act 2006 and s1(1) of the Criminal Law Act 1977 – Barclays Plc, John Varley and Roger Jenkins.
  • Unlawful financial assistance contrary to s151 of the Companies Act 1985 – Barclays Plc, John Varley and Roger Jenkins.

The Financial Conduct Authority in the UK, and the Department of Justice and the Securities and Exchange Commission in the US, are also investigating the Qatari ASAs. In addition, Barclays is currently fighting a civil suit in relation to the fundraising, against Amanda Stavely of PCP Capital Partners LLP and PCP International Finance Limited.

In a statement about the charges Barclays said it was “considering its position” and “awaits further details” from the SFO. The defendants will appear before Westminster Magistrates’ Court on the afternoon of 3rd July.

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