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.


IMF cuts global growth forecast and flags Middle East security worries

Updated 55 sec ago

IMF cuts global growth forecast and flags Middle East security worries

  • International economy is receiving significant boost — 0.5 percentage point of growth last year and this year
  • But IMF warns global economy continues to face array of risks

LONDON: The International Monetary Fund (IMF) lowered its global growth predictions for 2020 despite a slightly improving world economy and warned that geopolitical tensions in the Middle East could impact global oil supplies.

It expects world economic growth to accelerate be 2.9 percent last year, rising to 3.3 percent in 2020 and 3.4 percent in 2021.

The IMF released the figures ahead at the World Economic Forum in Davos, Switzerland.

“Rising geopolitical tensions, notably between the United States and Iran, could disrupt global oil supply, hurt sentiment and weaken already tentative business investment,” the IMF said.

The Middle East and Central Asia is expected to record 2.8 percent growth in 2020, slightly lower than the IMF's October outlook and reflecting a downward revision to Saudi Arabia’s oil output following last month’s decision by the OPEC+ group to extend supply cuts.

It expects the region to pick up speed in 2021 with growth of 3.2 percent.

IMF chief economist Gita Gopinath said: “We’ve seen clearly a rise in geopolitical tensions in the Middle East. We still have to see how far this goes. If you look at oil prices the reaction has been fairly muted at this point. We’ve seen some increase of about 3 to 4 dollars in the price of oil but nothing very large.”

Regional tensions have escalated sharply after the killing of a top Iranian commander in Baghdad, triggering Iranian retaliatory attacks.

“Prospects for several economies remain subdued owing to rising geopolitical tensions (Iran), social unrest (including in Iraq and Lebanon), and civil strife (Libya, Syria, Yemen),” the IMF said.

Although overall risks to the global economy have reduced over the year, the IMF warned that outcomes “depend to an important extent on avoiding further escalation” between Washington and Beijing.

It also flagged the possibility of new trade tensions emerging between the US and the EU.

“The reality is that global growth remains sluggish,” said IMF Managing Director Kristalina Georgieva. “We are all adjusting to live with the new normal of uncertainty.”