Barclays investors would have gone ‘completely nuts’ over secret Qatar fees, court hears

Former Barclays banker Richard Boath reportedly opposed the side-deal with Doha because he believed it was not right to pay one set of investors more than others. (Getty Images)
Updated 05 March 2019

Barclays investors would have gone ‘completely nuts’ over secret Qatar fees, court hears

  • Banker opposed side-deal with Doha, London court hears
  • Qatari investors must be as dishonest as those on trial if prosecution is correct, judge said

LONDON: Fellow investors in Barclays bank would have gone “completely nuts” if they knew about secret payments made to Qatar in its multibillion-dollar bailout of the UK lender, a London court heard on Monday.

The UK Serious Fraud Office (SFO) alleges that four bankers agreed to pay £322 million ($425 million) in fees to Qatar in exchange for investment during the 2008 financial crisis.

The SFO alleges that this was done through “sham” advisory services agreements.

Former Barclays banker Richard Boath, one of the four defendants in the historic fraud case, opposed the side-deal with Doha because he believed it was not right to pay one set of investors more than others, Bloomberg reported.

Boath told this to SFO investigators in 2014, it emerged in court on Monday.

When someone on Boath’s team came up with the idea of channeling extra payments via advisory agreements to meet Qatar’s demands for extra commission, Barclays ex-Middle East head Roger Jenkins reportedly wanted to move ahead with the plan.

But Boath told SFO investigators he objected to this arrangement, according to a tape played to a London jury Monday.

“I said, ‘hang on, Roger,’” Boath said on the tape, according to Bloomberg.

“We can’t do a transaction in which we give one set of fees to the market or to one set of economics for one group of investors and we have a different set of economics for another set ... because if they found out they’ll go completely nuts. You can’t do that. We can’t do that.’ I was quite vigorous, because I felt it quite strongly.”

Jenkins agreed that it wasn’t worth the risk, Boath told the SFO, according to the taped interview with investigators.

“‘Well **** that,’” Jenkins replied, according to Boath.

Boath said neither he nor Jenkins felt it was worth doing the deal to protect former CEO John Varley, a co-defendant, and ex-investment bank head Bob Diamond, who is not accused of wrongdoing.

“I’m not taking a hit to save John and Bob’s job,” Boath recalled Jenkins saying, Bloomberg reported. “**** that.”

The secret fees were said to be paid to ensure Qatar would make an investment of £4 billion to help Barclays avoid a state bailout.

The SFO alleges that the four defendants — whom also include former wealth boss Tom Kalaris — lied to investors about the fees.

The four deny the charges, which carry a maximum 10-year sentence.

Qatar’s former Prime Minister Sheikh Hamad bin Jassim and the state of Qatar are not part of the fraud trial.

But Judge Robert Jay, who is presiding over the trial, earlier told jurors that Qatari investors must be just as dishonest as the bankers on trial if the prosecution’s argument is correct, according to The Telegraph.

The judge said a “contract needs two parts,” and that if the prosecution’s case is correct, it must mean that “one or more individuals comprising or connected with the Qatari entity was equally dishonest in the criminal sense. There is no getting around that,” he was reported as saying in January.

The trial continues.


Trio wins economics Nobel for science-based poverty fight

Updated 9 min 38 sec ago

Trio wins economics Nobel for science-based poverty fight

STOCKHOLM: US-based economists Abhijit Banerjee, Esther Duflo and Michael Kremer won the 2019 Nobel Economics Prize on Monday for work fighting poverty that has helped millions of children by favoring practical steps over theory.
French-American Duflo becomes only the second woman to win the economics prize in its 50-year history, as well as the youngest at 46. She shared the award equally with Indian-born American Banerjee and Kremer, also of the United States.
The Royal Swedish Academy of Sciences said their work had shown how poverty could be addressed by breaking it down into smaller and more precise questions in areas such as education and health care, and then testing solutions in the field.
It said the results of their studies and field experiments had ranged from helping millions of Indian schoolchildren with remedial tutoring to encouraging governments around the world to increase funding for preventative medicine.
“It starts from the idea that the poor are often reduced to caricatures and even the people that try to help them do not actually understand what are the deep roots of (their) problems,” Duflo told reporters in Stockholm by telephone.
“What we try to do in our approach is to say, ‘Look, let’s try to unpack the problems one-by-one and address them as rigorously and scientifically as possible’,” she added.
The team pioneered “randomized controlled trials,” or RCTs, in economics. Long used in fields such as medicine, an RCT could for example take two groups of people and study what difference a treatment makes on one group while the other group is only given a placebo.
Applied to development economics, such field experiments found for example that providing more textbooks and free school meals had only small effects, while targeting help for weak students made a big difference to overall educational levels.
“It’s a prize not just for us but for the whole movement,” Banerjee later told a joint news conference at the Massachusetts Institute of Technology (MIT), where they both work. Kremer is a researcher at Harvard University.
Citing Banerjee’s methods as having transformed classroom teaching in state schools in New Delhi, the Indian capital’s chief minister Arvind Kejriwal said on Twitter that it was a “big day for every Indian.”

MALE-DOMINATED
The team have notably been associated with the “Teaching at the right level” (TarL) program which has helped 60 million children in India and Africa and focuses on math and reading skills for primary school pupils.
One project gathered evidence on how an often overlooked measure such as deworming children could help their education. Yet another found that making the renewal of teacher contracts dependent on pupil grades produced better scores, while reducing the pupil-teacher ratio had little impact.
Duflo said the importance of the two most commonly cited approaches to tackling poverty — foreign aid and freeing up trade with poor countries — had often been “overstated.”
While the United Nations estimates that global poverty has been cut by more than half since 2000, it says one in 10 people in developing regions still live on less than $1.90 a day. In sub-Saharan Africa, that proportion rises to 42%.
Duflo said it was clear that better designed policies were having an impact on alleviating poverty worldwide.
But some economists, while saluting their work, said it did not address the bigger inequalities in the global economy which left millions stuck in poverty regardless of local intervention.
“I would congratulate them but still put that caveat that poverty is artificially made by human beings who put up systems that deny others the opportunity to realize their full potential,” said James Shikwati, head of the Nairobi-based Inter Regional Economic Network think tank.
Asked whether Duflo’s award was an attempt to redress the gender imbalance in the prize’s history, Peter Fredriksson, chairman of the Nobel Committee for Economic Sciences, said it showed that women were now more present in economics.
Duflo remarked that it came at an “extremely important and opportune time” for women in a sector that has traditionally been very male-dominated.
“We are at a time when we are starting to realize in the profession that the way that we (treat) each other privately and publicly is not conducive all the time for a very good environment for women,” she said.
The 9 million Swedish crown ($915,300) economics prize is a later addition to the five awards created in the will of industrialist and dynamite inventor Alfred Nobel, established by the Swedish central bank and first awarded in 1969.