Former Barclays CEO suggested side deal to feed Qatar’ extra cash, London court hears

The court heard that former Barclays CEO John Varley, who is not on trial, suggested the bank could use a side deal to satisfy Qatar's extra cash demand. (AFP/File photo)
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Updated 14 January 2020

Former Barclays CEO suggested side deal to feed Qatar’ extra cash, London court hears

  • Thomas Kalaris, one of three former bankers on trial for fraud, described in court a meeting with a senior Qatari official in June, 2008
  • Prosecutors say the executives did not properly disclosing £322 million paid to Qatar during the financial crisis

LONDON: Former Barclays chief executive John Varley first suggested the bank could use a side deal to satisfy Qatar’s demands for extra cash in return for rescue funding for the bank during the 2008 credit crisis, a London court heard on Tuesday.
Thomas Kalaris, one of three former top Barclays bankers who deny fraud linked to the capital raising, on Tuesday described a meeting with a senior Qatari official on June 3, 2008, and how he subsequently took the service lift to Varley’s office on the 31st floor of the bank to discuss the Gulf state’s fee demands.
The case revolves around how Barclays avoided the fate of Lloyds and Royal Bank of Scotland and averted a state bailout with an £11 billion pound ($14.3 billion) fundraising in June and October 2008.
But the Gulf state, which became the largest single investor in Barclays, first asked for a fee of 3.75 percent in return for its investment — substantially above the 1.5 percent the bank was offering other investors, the jury has heard.
“His (Varley’s) immediate reaction was that he would be prepared to offer value of 3.5 percent ...,” Kalaris told the jury at the Old Bailey criminal court, as he began his testimony.
“He said it should be done via a side agreement,” he said, adding this was “quite common” in banking and “absolutely not” dishonest.
Varley was acquitted of fraud charges last year and is not accused of any wrongdoing.
Prosecutors for the UK Serious Fraud Office allege the three former executives lied to the market and other investors by not properly disclosing £322 million paid to Qatar, disguising them as “bogus” advisory services agreements (ASAs) in return for around four billion pounds in investments over 2008.
Kalaris, who ran the bank’s wealth division, Roger Jenkins, the former head of the bank’s Middle East business and Richard Boath, a former head of European financial institutions, deny conspiring to commit fraud and fraud by false representation.
The men have said the ASAs were designed to be genuine side deals to secure lucrative business for Barclays in the Middle East — a region the bank was eager to exploit — and were approved by lawyers and cleared by the board.
Kalaris, 64, agreed his role in the June 2008 capital raising could be described as a “quarterback” and involved, in part, ensuring decision makers “understood what was going on.”
“Did you think for a moment that Mr.Varley was instructing that there should be some form of dishonest or hidden nature to the balancing payment, whatever that amount would need to be?” Kalaris’s lawyer, Ian Winter, asked.
“Never,” Kalaris responded.
The trial continues.


Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

Updated 09 August 2020

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

  • Aramco see’s “partial recovery” from pandemic impact
  • Aramco president says company remains resilient

DUBAI: Saudi Aramco, the world’s biggest oil company, reported a net income of $6.57bn for the second quarter of 2020, the period which witnessed the most volatile oil market conditions for many decades.

The result, announced to the Tadawul stock exchange in Riyadh where the shares are listed, compared with income of $24.7 bn last year.

Amin Nasser, president and chief executive, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

Aramco’s dividend - a big attraction for the investors who bought into the world’s biggest initial public offering last year - will remain as pledged, Nasser added. Cash flow in the quarter amounted to $6.106 bn.

““Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter,” he said.

Aramco said the loss was “mainly reflecting the impact of lower crude oil prices and declining refining and chemicals margins, partly offset by a decrease in production royalties resulting from lower crude oil prices and a decrease in the royalty rate from 20 per cent to 15 per cent, lower income taxes and zakat as a result of lower earnings, and higher other income related to sales for gas products.”

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Sales and revenue in the period - which saw oil prices collapse on “Black Monday” in April - fell 57 per cent to $32.861 bn from the comparable period last year. 

Nasser said he was cautiously optimistic that the world economy was slowly recovering from the depths of the pandemic lockdowns.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” he added.

Aramco expects capital expenditure to be at the lower end of the $25bn to $30bn range it has already indicated for this year.