Former Barclays bankers lied about Qatari fees in 2008, fraud trial hears

Former Barclays head of investment banking and investment management in the Middle East, Roger Jenkins, and three other defendants face charges over an emergency fundraising from Qatar during the global financial crisis. (File/AFP)
Updated 08 October 2019

Former Barclays bankers lied about Qatari fees in 2008, fraud trial hears

  • The 3 have been charged with conspiracy to commit fraud over a June 2008 bid to raise capital
  • Allegations include conspiring to make dishonest representations in public documents for profit or to expose others to loss

LONDON: Three former Barclays executives lied to the market by hiding £322 million ($395 million) in extra fees that the bank paid Qatar in return for vital funding during the global credit crisis, a prosecutor told a London court on Tuesday.
The case, one of the most high-profile brought by the UK Serious Fraud Office (SFO), revolves around undisclosed payments to Qatar as Barclays raised more than £11 billion from investors in 2008 to avert a state bailout.
Opening the case for the prosecution, Edward Brown alleged that Roger Jenkins, Tom Kalaris and Richard Boath pretended commissions paid to Qatar in 2008 were fees for separate, commercially valuable advisory services agreements (ASAs).
“Telling lies in this way, say the prosecution, is a criminal offense,” Brown told the jury at London’s Old Bailey criminal court in a trial scheduled to last up to five months.
“It is committing fraud by false representations. They acted dishonestly, say the prosecution, in order to preserve the future of the bank and to preserve their own positions.”
The men, aged between 60 and 64, deny wrongdoing.
The case hinges on what Barclays told the market in public documents, such as the prospectuses and subscription agreements that outlined the fees and commissions that the bank paid to investors, including former Qatari prime minister Sheikh Hamad bin Jassim bin Jabr Al-Thani.
HIGH STAKES
Brown alleged that Barclays swept aside established banking practices of telling the truth in public documents about the terms on which investors were backing the bank as the credit crunch roiled markets, in order to secure around four billion pounds of investment from wealthy Qatar over 2008.
He alleged that the defendants used a “carefully contrived mechanism” to hide the additional fees with two Advisory Service Agreements that were not genuine, but a dishonest way of paying the Qataris extra and hiding the fees from the wider world.
The men sat impassively in the narrow, raised glass-surrounded dock.
The seven-year case is a rare example of a criminal prosecution of senior bankers at a global bank over conduct during the credit crunch more than a decade ago — and a high stakes trial for the SFO.
Jenkins is the former chairman of investment banking in the Middle East and north Africa, Kalaris headed the bank’s wealth division at the time and Richard Boath was the investment bank division’s head of corporate finance in EMEA.
Jenkins, 64, Kalaris, 63, and 60-year-old Boath are each charged with substantive fraud and conspiracy to commit fraud by false representation.
The three men each face both charges over the June capital raising, which include an allegation they conspired with former finance director Chris Lucas to make dishonest representations in public documents for profit or to expose others to loss.
Jenkins also faces both charges over the second fundraising four months later.
Lucas has not been charged because he is too ill to stand trial, the jury was told. Qatar, a major investor in Britain, has not been accused of wrongdoing.


Despite OPEC+ drama, oil markets uncertain on ‘historic’ deal

Updated 10 April 2020

Despite OPEC+ drama, oil markets uncertain on ‘historic’ deal

  • Heavy lifting of the meeting was accomplished fairly efficiently
  • Some analysts believe there could still be a headline number of 15 million barrels of cuts

DUBAI: The OPEC+ meeting hosted from Vienna turned into a night of high drama punctuated by “virtual” farce as delegates struggled to get a final deal to slash oil output by an unprecedented amount.

The heavy lifting of the meeting — the need for a rapprochement between Saudi Arabia and Russia if any headway was to be made in tackling the huge global oversupply of crude — was accomplished fairly efficiently.

The behind-closed-doors meeting of delegates had not even begun when Kirill Dmitriev, CEO of the Russian Direct Investment Fund and a member of the Russian OPEC negotiating team, declared a “historic moment” in the history of oil. “We, working closely together with the US, can bring stability back to global energy markets,” he told Arab News.

The broad outline of a deal began to emerge: A cut of 10 million barrels per day by OPEC + running for two months starting in May; reductions of 8 million barrels from June until the end of the year; followed by 6 million barrels reduction until the spring of 2022.

Still to be decided is the important issue of what baseline level of production the cuts are calculated from, but it is expected that Saudi Arabia will make the biggest contribution, perhaps cutting more than 3 million barrels of output.

That was indeed an unprecedented commitment by the oil producers. To put it in context, the early March OPEC+ meeting fell apart — sparking the price war — because of disagreement over proposed extra cuts of 1.5 million barrels. Now a reduction many times that has been waved through almost unanimously.

“Almost” because of Mexico, which threw a late-night spanner in the works by refusing to sign up to a deal beyond cutting a mere 100,000 barrels from its own production. There was talk of sharing out surplus between OPEC+ members to get Mexico’s signature to a deal; the Americans amusingly suggested they would take the Mexican excess crude; even a half-serious threat that Mexico should be expelled from OPEC.

After this interlude was the high drama of a phone call between King Salman of Saudi Arabia, President Putin of Russia and American President Donald Trump. The leaders “stressed the importance of cooperation between oil producing nations to maintain stability of energy markets and support growth in the global economy,” which is a good omen ahead of the meeting of G20 energy ministers scheduled for Friday mid-day Vienna time.

The G20, under Saudi Arabia's presidency will bring in the third leg of the global oil industry which had not been present at the OPEC+ talks — the US Energy secretary Dan Brouillette has agreed to take part in the G20 energy summit, and while the Americans have ruled out any formal cuts as part of the process, they will be keen to highlight reductions in capital expenditure and a “natural” decline in shale production — by which they mean the increasing risk of bankruptcy to shale companies. 

Some analysts believe that, perhaps with some sleight of hand, there could still be a headline number of 15 million barrels of cuts, which would satisfy the expectations President Trump declared last week.

Whether it satisfies the oil markets is still open to question. Despite the “historic” agreement between Saudi Arabia and Russia, and the prospect of some American buy-in to follow, the price of Brent crude, which has been rising most of last week in anticipation of the OPEC+ meeting, fell by nearly 5 percent to just over $32 a barrel.

Traders were surprised by the gloomy tone of Mohammed Barkindo, the OPEC secretary general, in his preamble to the Vienna virtual meeting. With some experts estimating that global demand is currently down by more than 30 percent, Barkindo said that the fundamentals of supply and demand in oil were “horrifying.”

Paul Young, head of energy products at the Dubai Mercantile Exchange, told Arab News: “The market initially liked Russia coming back into the fold, but focus now switches to the wider G20 group and the need for firm commitments from non-OPEC+ producers to bring the oil markets back into balance.” 

But even if the final level of cuts does manage to exceed 10 million barrels, many experts doubt that will be enough to offset huge demand loss.

Anas Al-Hajji, managing partner of Energy Outlook Advisers, said: “Trump has made a big mistake blaming Saudi Arabia and Russia. He will be shocked when oil prices remain low even if we have a 10-million-barrel cut.”