British court dismisses charges against Barclays over 2008 Qatar deal

A Barclays sign is seen outside a branch of the bank in London, Britain. Charges brought against Barclays bank over a $3bn loan made to Qatari investors have been thrown out by a British court. (Reuters)
Updated 21 May 2018
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British court dismisses charges against Barclays over 2008 Qatar deal

LONDON: A British court has dismissed charges brought by the Serious Fraud Office (SFO) against Barclays over its 2008 capital raising, the bank said on Monday, suspending for now the threat of regulatory sanctions on its business operations.
The SFO was however not prepared to let the case drop.
“We are likely to seek to reinstate the charges by applying to the High Court,” an SFO spokesman said. It was not clear when that application would be heard.
Barclays denied the SFO’s allegation that a $3 billion loan it made to Qatar in November 2008 was connected with a Qatari investment in the British bank which ultimately helped it avoid a British government rescue during the financial crisis, unlike its rivals Lloyds and Royal Bank of Scotland.
An end to the SFO’s case against Barclays and its operating subsidiary would remove the biggest remaining legal headache facing Barclays over its conduct during the financial crisis.
The collapse of one of its most high-profile corporate prosecutions would also represent a major setback for the SFO, with the prosecutor’s office under fire from politicians in recent years.
Qatar, which is a major investor in Britain, has not been accused of wrongdoing itself, but public companies in Britain are normally prohibited from lending money for the purchase of their own shares, known as “financial assistance.”
The SFO had been pursuing charges that Barclays unlawfully received such financial assistance, and that it had conspired with former senior executives to commit fraud over two so-called ‘advisory services agreements’ between Qatar and the bank which facilitated the fundraising.
NOT OVER YET
Even if the SFO were to fail in its efforts to reinstate the charges, Barclays still faces other legal and regulatory problems related to the 2008 fundraising.
The US Department of Justice and the Securities and Exchange Commission are investigating the advisory services agreements.
Separately four former Barclays bankers face a charge of conspiracy to commit fraud by false representation when they negotiated a capital injection for the bank from Qatar, in a trial due to start next January.
The four are former chief executive John Varley, and senior executives Roger Jenkins, Tom Kalaris and Richard Boath.
Barclays said the dismissal of the charges against itself should not be taken to have any bearing on whether other people may have committed a criminal offense.
Lawyers representing Boath and Jenkins declined to comment, while lawyers for the other two did not immediately respond to requests for comment.
British businesswoman Amanda Staveley has a separate $1 billion civil lawsuit against Barclays over the same fundraising.
Staveley’s private equity group PCP Capital Partners is claiming damages for alleged fraudulent misrepresentation in a row over whether Barclays offered Qatar and Abu Dhabi investors the same deal terms for participating in a fundraising in 2008.
Barclays has called the PCP lawsuit “misconceived.” Staveley declined to comment.
Barclays shares were up 0.7 percent by 1300 GMT, in line with the FTSE 350 British banks index.


Can green investment help relaunch Germany’s economy?

Updated 10 min 30 sec ago

Can green investment help relaunch Germany’s economy?

  • The German government has so far shown little willingness to change its stance

FRANKFURT, Germany: A recession looms for Germany and the European Central Bank is pleading for governments to spend more to revitalize economic growth. Yet despite having the luxury of borrowing money for less than nothing, the German government is keeping a tight rein on its finances.
A debate over Germany’s devotion to budget austerity is intensifying as the outlook for the economy dims and public pressure grows to address big issues such as global warming. On Friday, the government will unveil a raft of measures that could include billions in incentives and spending to make the economy more environmentally-friendly.
“The call for fiscal stimulus has never been louder,” said Carsten Brzeski, chief economist for the bank ING Germany. “And this week will show whether the eurozone country with the deepest pockets finally plans to empty them.”
The slowdown in growth across Europe, blamed largely on the US-China trade conflict and uncertainty about Brexit, is putting a sharp focus on Germany’s devotion to the so-called “Schwarze Null,” or “black zero,” which refers to the policy of balancing the budget — the zero — with at least a small surplus to keep it in the black.
The debate over government spending policy affects the entire 19-country eurozone, since more government outlays by Germany and other fiscally sound countries such as the Netherlands could help support growth by building new infrastructure, such as roads, rail lines or high-speed Internet, or by gathering less in taxes.
The German government has so far shown little willingness to change its stance. It has ignored repeated pleas from the head of the European Central Bank, Mario Draghi, who said last week it was “high time” for government spending to take over as the main tool of economic policy. The central bank announced interest rate cuts and bond purchases in an attempt to ward off a downturn.
The government argues it’s important to reduce debt while the economy is growing and not to burden future generations. German Finance Minister Olaf Scholz submitted a balanced draft budget of 360 billion euros ($400 billion) for 2020 last week and Chancellor Angela Merkel said in a speech before the German Taxpayers’ Federation that the government was sticking to its balanced budget, “not as a goal in itself, as we are often accused of doing, but because clear economic reasons and fairness aspects argue for that.”
Merkel noted that Germany’s total debt would fall below 60% of gross domestic product — the limit for countries that use the euro — for the first time since 2002. The German constitution itself sharply limits deficits to 0.35% of GDP except in a crisis, yet the government’s surpluses go well beyond that requirement.
While the German government may not be giving up on balanced budgets, there are signs it is at least easing up the zeal with which it amasses surpluses.
Last year’s surplus of 1.9% of GDP has fallen to 1.4% this year and is expected to hit 0.9% next year — meaning that the government is already providing some fiscal stimulus. Germany’s economy shrank 0.1% in the second quarter and underlying figures are pointing to another quarter of contraction, which would put the country in a technical recession.
It is striking that the government refuses any new borrowing at a time when it can do so at negative interest rates — meaning it would get paid back more than it borrows. German 10-year bonds currently yield minus 0.48%, and the government was able to sell a 30-year bond at a negative interest rate in August.
Marcel Fratscher, the head of the German Institute for Economic Research in Berlin, has called the balanced budget a “false fetish.” His institute has argued that Germany needs to invest in long-term modernization projects such as extending digital services in rural areas.
The president of the Federation of German Industries, Dieter Kempf, said in an interview with Der Spiegel that “it’s worth considering sensible use of the space,” allowed by the constitution to fund more investment.
The calls to spend are not coming only from those concerned about the economy, but also climate activists who say more needs to be done to shift the world economy from carbon-intensive industries and consumption. Public pressure has only grown after the country witnessed its hottest summer on record and the opposition Greens party made big gains in elections to the European Parliament and in domestic polls.
On Friday, the government is expected to unveil a package of incentives aimed at reducing carbon dioxide emissions from homes and autos so that Germany can meet its goals under the 2015 Paris climate accord. Possible measures include incentives to replace old heating systems or to purchase battery-powered autos. A report in Die Welt newspaper said the government was considering measures totaling some 40 billion euros ($44 billion) through 2023.
Brzeski said such a program “would not be enough to stop the slide of the economy toward recessionary territory, but it could be an important cornerstone in Germany’s recovery and its quest for a new economic model.”
Spending on that level would only be “a slow-motion stimulus” since it will take time to roll out, said Holger Schmieding, chief economist at Berenberg bank.
“It will add up over time and support domestic demand,” he said. “However, the German stimulus will not be a European, let alone a global, game changer.”