Barclays, Four Former Top Executives Charged With Fraud Over Fundraising With Qatari Investors -- Update
June 20 2017 - 3:36AM
Dow Jones News
By Max Colchester
The U.K.'s Serious Fraud Office on Tuesday filed criminal
charges against Barclays PLC and four former top executives linked
to their handling of Middle Eastern investments that rescued the
bank at the height of the financial crisis.
The SFO charged the individuals and the bank with conspiracy to
commit fraud. Two individuals, including its former Chief Executive
John Varley, were also charged with the provision of unlawful
financial assistance.
The allegations center on how Barclays structured two capital
injections from Qatari investors as the bank raised GBP11.8 billion
($15 billion) to prop it up during the 2008 financial market
meltdown. Barclays said it paid GBP322 million in "advisory
services" to Qatari investors, which wasn't initially disclosed
after the capital was raised.
The SFO's charges also relate to a $3 billion loan facility
Barclays made to the State of Qatar acting through the ministry of
economy and finance in November 2008, just before its second
capital raise.
Barclays said in a statement it is "considering its position in
relation to these developments."
Unlike its peers Royal Bank of Scotland Group PLC and Lloyds
Banking Group PLC, the Middle Eastern equity injections meant
Barclays was able to avoid a bailout by British taxpayers.
The SFO's case involves a cadre a Barclays top executives who
steered the bank at the time.
The prosecutor accused Mr. Varley, who was the bank's chief
executive between 2004 and 2011, of conspiracy to commit fraud and
unlawful financial assistance. Roger Jenkins, who played a key role
in orchestrating the capital raise when acting as chairman of
Barclays' investment banking and investment management in the
Middle East, was also accused of conspiracy for fraud and unlawful
financial assistance. Thomas Kalaris, who used to run the bank's
wealth division, was charged with conspiracy to commit fraud.
Richard Boath, a former senior executive at the investment bank,
was accused of conspiracy to commit fraud.
Under U.K. law, when the men appear at the magistrate's court,
they will have the option to enter a plea. Any bail conditions will
be set and prosecutors will give a brief synopsis of their case.
Magistrates then decide which court will hear it. They will appear
before a court in London on July 3.
The Barclays case is a major test for the SFO, which has in
recent years failed to successfully prosecute a number of high
profile bribery and corruption cases. U.K. Prime Minister Theresa
May recently pledged to fold the SFO into another crime fighting
agency. The Barclays case will be particularly scrutinized as so
far no top bank executives in the U.K. have been charged with
crimes linked to their actions during the financial crisis.
Barclays is already facing other legal problems linked to the
Qatar capital raisings. In a separate probe, the U.K.'s Financial
Conduct Authority imposed a GBP50 million fine over the disclosure
failures. The FCA said earlier this year that it was reviewing the
case after being handed new evidence. Barclays is contesting the
fine.
The U.S Department of Justice and the Securities and Exchange
Commission are also investigating the payments made to Middle
Eastern officials. Separately PCP Capital Partners, a
private-equity group, is suing Barclays for $1 billion alleging it
made "sham payments" to the Middle Eastern investors. PCP, which
helped organize Abu Dhabi's investment in Barclays in 2008, also
alleges that Barclays lent Qatar investors $3 billion to invest
back into the bank. Barclays has previously denied this.
The court case is another distraction for Barclays's current
chief executive, Jes Staley, as he attempts to clean up the bank.
Mr. Staley is himself currently under investigation by U.K.
regulators for trying to identify a whistleblower at the bank.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
June 20, 2017 03:21 ET (07:21 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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