Barclays, its former chief executive and three other ex-senior executives have been charged by UK authorities with fraud related to the emergency cash injections that saved the bank from a government bailout at the height of the 2008 financial crisis.
The Serious Fraud Office case against John Varley marks the first time the head of a global bank has faced criminal charges for activities during the crisis, when big lenders across Europe and the US were being rescued by taxpayers.
The SFO charged Barclays yesterday with three counts, including conspiracy to commit fraud by false representation and unlawful financial assistance over its arrangements with Qatari investors who ploughed a total of £6.1bn into the bank in June and October 2008.
The case centres on side deals with the investors, which were part of the cash infusions and not fully disclosed to the market. The fundraisings allowed the bank to remain independent of the government at a time when two of its biggest British rivals - Royal Bank of Scotland and Lloyds Banking Group - had to accept taxpayer money.
At the time that Barclays received the two investments, it promised to pay Qatari investors £322m for helping it develop business in the Gulf. And in November 2008, Barclays agreed to provide a $3bn loan facility to the state of Qatar. The SFO has investigated whether these transactions were intended as undisclosed inducements for the Qataris to invest and whether the loan was secretly reinvested in the bank.
In addition to Mr Varley, the SFO has charged Roger Jenkins, the rainmaker who put the deals together; Tom Kalaris, the trusted lieutenant of the head of the investment bank; and Richard Boath, who ran its corporate finance business.
The defendants, including Barclays’ parent group, are due in court in London on July 3. Barclays said it was considering its position. “Barclays awaits further details of the charges from the SFO.”
The case strikes at the heart of Barclays' status as one of the few big British banks to survive the period without government help. "This is the most significant charging decision for the SFO in recent times, if not ever," said Sarah Wallace of legal firm Irwin Mitchell.
Markets were in turmoil in 2008 when Barclays turned to Qatar. In the second cash call in October - a month after Lehman's bankruptcy - Barclays tapped investors from the royal families of Qatar and Abu Dhabi.
Lawyers for Mr Varley and Mr Kalaris declined to comment. Mr Jenkins' lawyer, Brad Kaufman, said his client would "vigorously defend against these charges". Mr Boath said he would contest the charge against him "vigorously".
Barclays shares closed down 1.9 per cent to 202.8p, in line with other UK banks, suggesting investors have either priced in the risk of charges or they believe they will have a limited impact.
- (Copyright The Financial Times Limited 2017)
