Former Barclays bosses hid £322m in Qatar fees in 2008, court told

Former Barclays' CEO John Varley arrives at Southwark Crown Court in London. (Reuters)
Updated 23 January 2019

Former Barclays bosses hid £322m in Qatar fees in 2008, court told

  • London trial of former Barclays executives begins
  • Bankers are most senior to face London trial since 2008 crisis

LONDON: Four former Barclays executives conspired to commit fraud by hiding £322 million of payments to Qatar in return for cash injections in 2008, a prosecutor alleged at the opening of one of London’s most high-profile criminal trials.
Former chief executive John Varley and three former directors are the most senior bankers to be prosecuted in Britain over events during the financial crisis, when Barclays avoided a state bailout by raising more than £11 billion from mainly Gulf investors in two cash calls.
Opening the case for the Serious Fraud Office prosecutor, senior lawyer Edward Brown alleged that the bank’s Advisory Service Agreements (ASAs), through which Qatar was paid £322 million ($419.66 million) in 2008, were a “dishonest mechanism” to conceal extra fees from other investors and the wider market.
“It is the hiding of these additional commission fees which lies at the heart of this case...,” he told the jury at London’s Southwark Crown Court in a courtroom so packed that reporters had to request tickets to gain entry.
“(The ASAs) were devised by the conspirators as mechanism for paying the Qataris greater fees than those paid to other investors so as not to reveal the true position ...,” Brown told the court in a trial scheduled to last up to six months.
Varley, 62, in an open-necked shirt and jumper, listened in the glass-surrounded dock, flanked by Roger Jenkins, in a polo neck jumper and jacket, Tom Kalaris and Richard Boath, both wearing suits.
They are charged with conspiracy to commit fraud by false representation. Varley and Jenkins face two counts and Kalaris and Boath face one. They all deny the charges.
Varley and Jenkins, the 63-year-old former head of Barclays’ Middle Eastern arm, are charged with two counts of conspiring dishonestly with former finance director Christopher Lucas to make misleading or untrue representations in documents published in relation to both the June and October capital raisings.
Kalaris, 63, who ran Barclays’ wealth management business, and Boath, a 60-year-old former head of the corporate finance division, face one count over the June 2008 cash call. Both charges allege the men were either seeking to profit or to cause or expose others to losses.
Lucas, who is suffering from ill-health, has not been charged.
The case hinges on what the bank disclosed in its public statements in 2008; the prospectuses for the capital raisings and subscription agreement documents published that June and October, which outlined fees and commissions paid to investors in return for backing the bank.
Prosecutors allege that Barclays thought it essential to secure a deal with Qatar in early 2008 as markets roiled, but that the Gulf state drove a hard bargain.
Qatar initially demanded a fee of 3.75 percent before settling on 3.25 percent in return for investing in the bank — more than double what Barclays was paying other investors, the prosecution alleged.
Unwilling to risk other investors demanding the same terms — or appearing financially unstable by being seen to pay too high a price — the executives played a part in false representations to the market, the prosecution alleged.
Brown said some defendants relied on the fact that lawyers had sanctioned the use of ASAs by signing off on them, as their defense in the case. But he alleged lawyers were told the ASAs were genuinely designed to represent services provided by Qatar and that they were separate from the Qatari investment in Barclays.
“The truth is that the lawyers did not approve of the use of the ASAs as mechanisms to hide the commission fees paid to the Qataris,” he said.
Qatar, which has not been accused of wrongdoing, plowed around £4 billion into Barclays in 2008, Brown said.
The trial continues this week.

Saudi oil refinery in Gwadar to help Islamabad save $3 billion a year

Updated 17 min 58 sec ago

Saudi oil refinery in Gwadar to help Islamabad save $3 billion a year

  • The refinery would produce up to 300,000 barrels per day once completed
  • Saudi Arabia is also setting up reservoirs for liquified natural gas in Pakistan, says Petroleum Minister Ghulam Sarwar Khan

ISLAMABAD: Pakistan expects to agree a deal to build an oil refinery and petrochemical complex at the Balochistani deep-sea Port of Gwadar, during the first state-level visit by Saudi Arabia’s Crown Prince Mohammed bin Salman.

The deal will see Pakistan join with Saudi Aramco to build the facility, expected to cost $10 billion.

“We are working on feasibility studies for the establishment of the oil refinery and petrochemical complex in Gwadar, and will be ready to start by early 2020,” Pakistan’s Minister for Petroleum Ghulam Sarwar Khan told Arab News on Thursday.

Once established, the project will help the South Asian nation cut its annual crude oil imports by up to $3 billion annually, in addition to creating thousands of job opportunities in the impoverished western province.

The country spends more than $16 billion each year on importing 26 million tons of petroleum products, including 800 million cubic feet of liquified natural gas (LNG) from Saudi Arabia, the UAE and other Gulf countries.

Khan claimed the refinery would produce up to 300,000 barrels per day once completed.

“The Saudi authorities have asked us to complete all the initial work on the project on a fast track, as they want to set it up as early as possible,” he said.

A Saudi technical team, including Energy Minister Khalid Al-Falih, has visited Gwadar twice in recent months to examine the site for the refinery, getting briefings from Pakistani officials on security in the area near the border with Iran.

“We will ensure complete security for Saudi investments and people working on the project. A detailed security plan has already been chalked up with help of the security agencies,” Khan added.

Pakistan currently has five oil refineries, but they can only satisfy half of its annual demand. Islamabad and Riyadh have long maintained strong ties, with the latter repeatedly offering the former financial assistance. Last year, the Kingdom guaranteed Pakistan $3 billion in foreign currency support for a year, and a further loan worth up to $3 billion in deferred payments for oil imports, to help stave off an economic crisis. The Islamic Republic also received $3 billion from the UAE to protect its foreign reserves.

Khan added that the Pakistani-Arab Refinery Co. (PARCO) was also setting up an oil refinery at Khalifa Point, near the city of Hub in Balochistan. 

“The work on this project is at an advanced stage. Land for it has been acquired and other formalities are being fulfilled,” he said.

Khan hopes the world’s perception of Pakistan will change upon completion of these deals, after years of war in the surrounding region. Exxon Mobil returned to Pakistan last month after 27 years, and started offshore drilling with $75 million of initial investments. 

“All results of the drilling are positive so far, and we expect huge oil and gas reserves to be discovered soon,” he said.

“More foreign companies are contacting us to invest in offshore drilling and exploration. Saudi Arabia is also setting up reservoirs for LNG in Pakistan. More Saudi investment will come to Pakistan with the passage of time.”