Barclays Plc has once again found itself in the regulatory crosshairs, albeit by its past regime and leadership. The lender along with four former executives are facing charges with conspiracy to commit fraud, dating back to a 2008 capital raise from Qatar in a bid to avoid a bailout during the depths of the global financial crisis.
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The allegations date back to one of Barclays’ darker days, which pitted the lender against a flurry of industry shakeups and crises. Amidst pressure to avert a bailout, Barclays orchestrated a mad dash to secure critical funds to cover its losses. Looking to Qatar for a vital lifeline, the lender brokered a deal with the Qatar Investment Authority in 2008.
More specifically, the case under investigation involved a deal worth $408 million in fees that Barclays paid to group, coupled with a $3 billion loan facility it made available to the Qatar itself – this also included a string of side deals that totaled $15.2 billion in fundraising from Qatari and other investors. Nine years later however, the deal is facing scrutiny from the UK’s Serious Fraud Office (SFO), which found evidence of fraud.
Five-year probe unearths shady dealings
As such, Barclays’ former Chief Executive Officer (CEO) John Varley, former chairman of investment banking for the Middle East Roger Jenkins, ex-chief Thomas Kalaris, and Richard Boath, Barclays’ former European head of the bank’s financial institutions group, along with the lender itself are all facing charges from the SFO for their role in this deal after a lengthy probe lasting over five years.
An ongoing probe dating back to a period nearly ten years ago is just one of several lingering woes currently facing the lender as it looks to placate an increasingly restless investor base that has endured decreasing profits, job cuts, and other shakeups. The development also follows just days after its current CEO Jes Staley, was revealed to be facing an examination from the US Department of Justice (DoJ) for its potential role in brokering a ‘no-poach’ agreement with rival lender JPMorgan. The regulatory authority was looking into whether Barclays breached antitrust laws in its hiring of JPMorgan’s bankers.
This is hardly the first probe to look into Barclays’ past dealings since the financial crisis, which to date have included FX manipulation charges, rigging, breaches in whistleblowing laws, and other episodes of abuse. The SFO’s investigation was not simply relegated to just Barclays main operations, but also several subsidiaries, which could all potentially be in line for charges in the Qatari case.
Fraud charges
Mr. Varley and Mr. Jenkins are both facing three counts of conspiracy to commit fraud by false representation and unlawful financial assistance. Furthermore, Mr. Boath and Mr. Kalaris each face one fraud count, per a Bloomberg report. The fates of all four individuals will ultimately receive more clarity following a London court hearing that is slated for July 3, 2017.
The SFO was probing into Barclays’s capital arrangements with Qatar Holding LLC, a subsidiary of the country’s QIA sovereign wealth fund, and Challenger Universal Ltd., which operates as an investment vehicle of the country’s then prime minister. This same deal has drawn the attention of the UK’s Financial Conduct Authority (FCA) ), which re-started its own investigation following the release of more documents since a previous resolution and $63 million fine – the SFO and FCA are currently working closely together.
All four individuals are currently pushing back against the SFO’s allegations, with the group as a whole deploying a string of legal defenders. Despite the blowback, the upcoming court hearing next month could further challenge the allegations, with any additional evidence between now and then also further implicating the former executives.
