Former Barclays bosses face London trial over Qatari cash call

Barclays secured around £12 billion ($15 billion) in emergency funds from mainly Gulf investors as markets plunged in 2008, allowing it to avoid the state bailouts. (Reuters)
Updated 04 January 2019
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Former Barclays bosses face London trial over Qatari cash call

  • Barclays secured around £12 billion ($15 billion) in emergency funds from mainly Gulf investors as markets plunged in 2008
  • Qatar, a major investor in Britain, has not been accused of wrongdoing

LONDON: The most senior bankers to face criminal charges in Britain over conduct during the financial crisis will appear before a London jury next week in a trial that will test the mettle of the Serious Fraud Office.
Former Barclays CEO John Varley and three one-time colleagues stand charged over deals with Qatari investors to secure cash injections that allowed the bank, that can trace its origins back to around 1690, to survive the crisis a decade ago.
The trial, scheduled to start on Monday and slated to last for up to four months, is expected to begin with lengthy legal, procedural arguments before prosecutors open their case.
Varley, who married into one of the families that helped build Barclays, Roger Jenkins, the one-time chairman of the Middle Eastern banking arm, Tom Kalaris, an American former wealth division CEO and Richard Boath, a former European divisional head, are charged with conspiracy to commit fraud.
Varley, renowned for trademark bright braces and Jenkins, now based in California, also face a separate charge of unlawful financial assistance — a practice of companies lending money to fund the purchase of their own stock.
Lawyers for Boath and Kalaris declined to comment, while legal representatives for the other defendants did not respond to requests for comment.
When charges were filed in June 2017, a lawyer for Jenkins said his client would vigorously defend himself against the allegations. Boath said at the time he had no case to answer.
Barclays secured around £12 billion ($15 billion) in emergency funds from mainly Gulf investors as markets plunged in 2008, allowing it to avoid the state bailouts taken by rivals Royal Bank of Scotland and Lloyds.
Qatar Holding — part of the Qatar Investment Authority sovereign wealth fund — and Challenger, an investment vehicle of former Qatari prime minister Sheikh Hamad bin Jassim bin Jabr Al-Thani, invested about £6 billion in the bank.
But the SFO, which prosecutes serious white collar crime, has charged the men over “capital raising arrangements” with Qatar Holding and Challenger in June and October 2008 and a $3 billion loan facility Barclays made available to Qatar in November 2008.
Qatar, a major investor in Britain, has not been accused of wrongdoing.
Lawyers say the performance of the SFO will be under as much scrutiny as that of the well-heeled defendants after a court threw out its separate charges against Barclays over the capital raising — and a judge last month halted its prosecution of former senior Tesco supermarket managers mid-trial.
Lisa Osofsky, who took the top job at the agency last August, has stood back from handling the Barclays case because of a potential conflict of interest linked to her previous work.
The new year has started briskly for the SFO. Its retrial of three former Barclays traders accused of plotting to rig Euribor global interest rates kicks off on Jan. 14. A jury was unable to reach a verdict in their case last year.


US economists less optimistic, see slower growth: survey

Updated 25 March 2019
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US economists less optimistic, see slower growth: survey

  • While the odds of a US recession by 2020 remain low, they are rising
  • The odds of a recession starting in 2019 is at around 20 percent, and for 2020 at 35 percent

WASHINGTON: US economists are less optimistic about the outlook and sharply lowered their growth forecasts for this year, amid slowing global growth and continued trade frictions, according to a survey published Monday.
And while the odds of a recession by 2020 remain low, they are rising, the National Association for Business Economics said in their quarterly report.
The panel of 55 economists now believe “the US economy has reached an inflection point,” said NABE President Kevin Swift.
The consensus forecast for real GDP growth was cut by three tenths from the December survey, to 2.4 percent after 2.9 percent expansion in 2018.
The economy is expected to slow further in 2020, with growth of just 2 percent, the report said.
Three-quarters of respondents cut their GDP forecasts and believe the risks of to the economy are weighted to the downside.
“A majority of panelists sees external headwinds from trade policy and slower global growth as the primary downside risks to growth,” NABE survey chair Gregory Daco said in a statement.
“Nonetheless, recession risks are still perceived to be low in the near term.”
Panelists put the odds of a recession starting in 2019 at around 20 percent, and for 2020 at 35 percent, slightly higher than in December.
Daco said that “reflects the Federal Reserve’s dovish policy U-turn in January” when the central bank said it would keep interest rates where they are for the foreseeable future, a message reinforced this week.
After four rate increases last year, Daco said a “near-majority of panelists anticipates only one more interest rate hike in this cycle compared to the three hikes forecasted in the December survey.”
Panelists see wage growth as the biggest upside risk to the economy, despite expected increase of just 3 percent this year, as inflation holds right around the Fed’s 2 percent target.
Meanwhile, amid President Donald Trump’s aggressive tariff policies, the panel projects the trade deficit will rise to a record $978 billion this year, beating last year’s record $914 billion.
In an interesting twist in the survey, only 20 percent said they expected to see the dreaded “inverted yield curve” — when the interest rate on the 10-year Treasury note falls below the 3-month bill — this year.
In fact, the yield curve inverted on Friday for the first time since 2007.