Barclays and four former executives have been charged with fraud over the way the bank raised billions of pounds from Qatari investment during the 2008 financial crisis.
Instead of accepting a government bailout like Lloyds TSB and RBS to sure up its balance sheet in 2008, Barclays looked to raise funds abroad. The bank raised £4.5bn through a non-traditional rights issue in June 2008 from a variety of investors, including the Qatar Investment Authority and Challenger, an organisation representing Qatari prime minister Sheikh Hamad bin Jassim bin Jabr Al-Thani. In October, Barclays raised a further £7bn from investors in Abu Dhabi and Qatar.
The Serious Fraud Office (SFO) has charged Barclays with two offences of conspiring with certain former senior officers and employees of Barclays to commit fraud by false representations relating to two advisory services agreements entered into with Qatar Holding LLC in June and October 2008, contrary to Sections 1-2 of the Fraud Act 2006, and Section 1(1) of the Criminal Law Act 1977 and one offence of unlawful financial assistance contrary to section 151(1) of the Companies Act 1985 in relation to a USD 3 billion loan provided to the State of Qatar in November 2008.
In a statement, the bank said:
“Barclays is considering its position in relation to these developments.
“The Charges arise in the context of Barclays’ capital raisings in June and November 2008. Barclays awaits further details of the Charges from the SFO. The SFO has informed Barclays that it has not made a decision as to whether it will also bring charges against Barclays Bank PLC in respect of the Loan.”
These charges represent the first time criminal action related to the financial crisis have been brought against a bank in the UK.
Four Barclays executives have been charged alongside the bank. Former chief executive John Varley, former senior investment banker Roger Jenkins, former chief executive of Barclays’ wealth division Thomas Kalaris, and former European head of financial institutions Richard Boath, have all been charged with conspiracy to commit fraud in the June 2008 capital raising.
Varley and Jenkins have also been charged with the same offence in relation to the October 2008 capital raising and with providing unlawful financial assistance.
Speaking to Reuters, Brad Kaufman, long-time counsel for Jenkins at US law firm Greenberg Traurig said:
“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 today”