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 05 March 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.


Africa development bank says risks to continent’s growth ‘increasing by the day’

Updated 24 min 35 sec ago

Africa development bank says risks to continent’s growth ‘increasing by the day’

  • The trade dispute between US and China has roiled global markets and unnerved investors
  • African nations need to boost trade with each other to cushion the impact of external shocks

DAR ES SALAAM: The US-China trade war and uncertainty over Brexit pose risks to Africa’s economic prospects that are “increasing by the day,” the head of the African Development Bank (AfDB) told Reuters.
The trade dispute between the world’s two largest economies has roiled global markets and unnerved investors as it stretches into its second year with no end in sight.
Britain, meanwhile, appears to be on course to leave the European Union on Oct. 31 without a transition deal, which economists fear could severely disrupt trade flows.
Akinwumi Adesina, president of the AfDB, said the bank could review its economic growth projection for Africa — of 4 percent in 2019 and 4.1 percent in 2020 — if global external shocks accelerate.
“We normally revise this depending on global external shocks that could slowdown global growth and these issues are increasing by the day,” Adesina told Reuters late on Saturday on the sidelines of the Southern African Development Community meeting in Tanzania’s commercial capital Dar es Salaam.
“You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the United States and China. All these things can combine to slow global growth, with implications for African countries.”
The bank chief said African nations need to boost trade with each other and add value to agricultural produce to cushion the impact of external shocks.
“I think the trade war has significantly impacted economic growth prospects in China and therefore import demand from China has fallen significantly and so demand for products and raw materials from Africa will only fall even further,” he said.
“It will also have another effect with regard to China’s own outward-bound investments on the continent,” he added, saying these could also affect official development assistance.
Adesina said a continental free-trade zone launched last month, the African Continental Free Trade Area, could help speed up economic growth and development, but African nations needed to remove non-tariff barriers to boost trade.
“The countries that have always been facing lower volatilities have always been the ones that do a lot more in terms of regional trade and do not rely on exports of raw materials,” Adesina said.
“The challenges cannot be solved unless all the barriers come down. Free mobility of labor, free mobility of capital and free mobility of people.”