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SFO charges senior Barclays bankers with fraud

Lawyers review prospects of civil claims in connection with bank’s 2008 fund raisings

20 June 2017

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The Serious Fraud Office has charged Barclays Plc and four former senior bankers with fraud over the way the bank raised £11.8bn from Qatar during the financial crisis.

The charges relate to the bank’s capital raising arrangements with Qatar Holding LLC and Challenger Universal Ltd between June and October 2008, and a US$3bn loan facility made available to the State of Qatar acting through the Ministry of Economy and Finance in November 2008.

The SFO has brought the charges against Barclays’ former chief executive John Varley and three former colleagues – Roger Jenkins, Tom Kalaris, and Richard Boath.

Greenberg Traurig vice president Brad Kaufman, representing Jenkins, said his client would ‘vigorously defend’ himself against the charges.

‘As one might expect in the challenging circumstances of 2008, Mr Jenkins sought and received both internal and external legal advice on each and every topic covered by the SFO’s accusations,’ Kaufman told Reuters.

The defendants will appear before Westminster Magistrates’ Court at 2.00 pm on 3 July 2017. Barclays said it is ‘considering its position in relation to these developments’.

Commenting on the news, Philip Marshall QC, of Serle Court Chambers, explained that the legal precedent for the case was ‘limited’.

‘It seems that one area of focus is the possible use of Barclays assets to finance the purchase of its own shares. That is an offence in some circumstances under the Companies Act but rarely gives rise to prosecutions – normally it is dealt with by civil claims,’ he said.

‘The closest analogy in the criminal context might be the Guinness share ramping case. It will be interesting to see whether this is indeed the focus or whether the SFO will instead rely on the misleading of regulators as the principal area.’

Marshall said that the suggestion of aggravating factors, involving alleged concealment or misleading of the authorities, as well as the amounts involved and status of Barclays, may have prompted the SFO to take this case into the criminal domain.

‘No doubt the detailed factors behind the decision will become clearer in the coming weeks,’ he added.

Raj Chada, a criminal defence solicitor at Hodge Jones & Allen, said: ‘There has long been a clamour for individuals at banks to be held accountable for the casino banking that led to the crash and the tax payer bailouts.

‘The irony here is that this prosecution has nothing to do with behaviour that caused the crash but related instead to the terms of a bail out. Even more strange is that Barclays have found themselves in this mess as they eschewed a UK government bailout and went to Qatar instead.’

Chada added: ‘No doubt questions will be asked about whether a deferred prosecution agreement (DPA) could have been considered in this case rather than a prosecution starting.

‘The SFO have previously made clear that full cooperation is a key and it is not known what the position with Barclays was. Any fine for Barclays could be in the hundreds of millions.’

Simon Bushell, a partner at Signature Litigation, said it was ‘striking’ that the charges come nine years after the events in question and relates, ‘not to the causes of the global financial crisis, but to a “clean-up”’.

‘The decision to charge Barclays shows that the idea that claims arising from the crisis are fizzling out is wide of the mark,’ he added. ‘It is often the case that the more serious the issues, the harder it is to get to the bottom of them, especially where fraud is alleged.‎

‘We know from our own ongoing mandates that there are some very large claims out there which have not yet been brought, and which go right back to the lead up to the crisis.’

City-headquartered RPC has confirmed it is reviewing the prospects for civil claims concerning documents published to shareholders in connection with the June and October 2008 fund raisings.

Simon Hart, a partner in the firm’s banking litigation team, commented: ‘The SFO’s case is that Barclays and the individuals charged falsely represented the true position with regard to the terms of the Qataris involvement in the fund raisings.

‘Shareholders who subscribed for shares and suffered losses as a result of any deliberately misleading information or omissions deserve redress.’

John van der Luit-Drummond is deputy editor of Solicitors Journal

john.vanderluit@solicitorsjournal.co.uk | @JvdLD

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Crime White collar crime

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Barclays SERIOUS FRAUD OFFICE sfo Fraud Financial fraud Banking