Regulation  

Barclays execs accused of secret Qatar funding

Barclays execs accused of secret Qatar funding

A former Barclays chief executive and three senior bank executives avoided a taxpayer bailout at the height of the financial crisis by getting billions of pounds of secret funding from Qatar, a court heard.

Ex-chief executive John Varley, 62, and former colleagues – Roger Jenkins, 63, Tom Kalaris, 63, and 60-year-old Richard Boath – allegedly raised £11.8bn in emergency fundraising in 2008.

The deal was the subject of a five-year investigation by the Serious Fraud Office.

Prosecutors allege the defendants knowingly hid the eye-watering fees in order avoid looking weak and triggering a loss of confidence in the bank.

The four all deny conspiracy to commit fraud by false representation in relation to the emergency fundraising which allowed Barclays to avoid direct governmental intervention.

Investors who contributed include Qatar Holdings, an arm of the Gulf state's sovereign wealth fund.

Prosecutor Ed Brown QC told jurors: "The backdrop of the case is the global financial crisis of 2008.

"At that time, most of you will remember, there was a very significant banking crisis in the United Kingdom, the United States and many other parts of the world.

"John Varley was at that time the Barclays Group chief executive. Roger Jenkins was Barclays Capital, or “Bar Cap”,  executive chairman of Investment Management in Midland East and North Africa.

"Thomas Kalaris was Barclays' Wealth Management chief executive officer and Richard Boath was “Bar Cap” head of European Financial Institutions Group.

"The other conspirator, say the Crown, that you will hear about is Christopher Lucas, who is known by everyone as Chris, who was at the time Barclays Group financial director."

The prosecutor explained Mr Lucas had a long running illness and was unable to stand trial.

Mr Brown continues, adding that by summer 2008, Barclays were under extreme pressure to raise capital to avoid illiquidity and by that same autumn, the government was imposing such capital requirements.

The prosecutor added: "Those at the top of Barclays were very anxious to avoid accepting government money, thereby placing itself under greater government control and scrutiny.

"Now it is no exaggeration to say that Barclays' future as an independent bank was in jeopardy in September and October of 2008."

The jury heard how the bank began a round of capital raising to avoid the possibility of a state-funded bailout.

"The overall figures involved are very considerable indeed as you might expect. In June 2008, the capital raising undertaken by Barclays secured £4.4bn.

"In October 2008, when further shoring up of Barclays' capital ratios was imposed upon it, it raised a total of £6.8bn.

"As we shall see, during these capital raisings the Qataris, in particular through the Qatar Investment authority and Qatar holdings, the Qataris made what were very substantial investments in Barclays to shore up their capital base.

"Approximately £1.9bn in June 2008 and £2.05bn in November 2008.

"The Qatari money was essential. Those within the bank at that time commented that without it the consequences would be dire – for the bank and personally."