Barclays Dismissed FRAUD

The High Court in London has dismissed an application to reinstate the Serious Fraud Office’s charges which sought to prosecute Barclays for alleged fraud surrounding its fundraising during the financial crisis.

The issue can be traced back to 2008 when Barclays took a £12bn loan from Qatar Holding, and in turn said it would loan £2.3bn back to the organisation, which is owned by the state of Qatar.

The SFO alleged there was “unlawful financial assistance” over the arrangement, and launched a case against Barclays.

In May, the Crown Court dismissed the charges against the bank, but the SFO pursued the case and applied to the High Court to reinstate the charges.

On Friday the High Court dismissed all the allegations against Barclays.

Barclays has escaped a high-profile jury trial over its emergency cash-raising during the financial crisis after the UK’s anti-fraud agency failed in its last-ditch attempt to reinstate criminal charges against the bank. Friday’s decision by a court in London removes a five-year-old shadow hanging over Barclays and further bolsters the British bank days after posting its fourth consecutive quarter of growth, a vindication of the strategy of its chief executive, Jes Staley. The Serious Fraud Office applied to a High Court judge this week after a judge in a lower court dismissed all charges against the bank in the SFO’s case over the 2008 capital-raising. Barclays twice turned to Middle Eastern investors that year to stay out of the control of the UK government as other high-street rivals were bailed out. But in what amounts to a get-out-of-jail card for Barclays, Lord Justice Davis rejected the SFO’s application for a so-called voluntary bill of indictment. The ruling is a blow for the SFO in one of its flagship cases that has taken more than five years to investigate, with the help of special Treasury funding in the millions of pounds. The decision also raises questions over the ability of UK prosecutors to hold large corporates to account. “The SFO believes it was right to bring this to the attention of the High Court,” the agency said in a short statement following the four-day hearing this week, packed with some of the most senior barristers in the country acting for both sides. It was the last chance for the SFO to persuade a court that the bank should be part of a jury trial, scheduled for January, where Barclays’ former chief executive, John Varley, will be in the dock with three other former top executives. It now means the trial will go ahead against the individuals rather than the bank. The four defendants deny the charges. The January proceeding will be the first jury trial in the world of a major bank’s CEO over actions taken during the financial crisis. Markets were roiling in 2008 when Barclays turned twice to the Qatari investors during fundraisings. In the second cash call in October of that year — a month after the bankruptcy of Lehman Brothers — Barclays tapped investors from the royal families of both Qatar and Abu Dhabi. The SFO had originally charged Barclays with three counts, including conspiracy to commit fraud by false representation, over its arrangements with Qatari investors, who ploughed a total of £6.1bn into Barclays over two cash calls in June and October 2008. The SFO accused the bank of inducing the Qataris to invest through side deals worth more than £300m not fully disclosed to the market nor to other investors. The bank’s loan of $3bn to Qatar just as the October deal was closing prompted the SFO to also bring charges of unlawful financial assistance — the practice of companies lending money to fund the purchase of their own shares — against both Barclays plc and Barclays Bank plc, one of its main operating subsidiaries through which many of its regulatory licences are granted. Lord Justice Davis’s decision provides a much-needed boost to Barclays as it is trying to rebuff Edward Bramson, an activist investor who wants to shake things up and shrink the investment-banking unit. The bank published third-quarter earnings on Wednesday that boosted Mr Staley’s plan to allocate more capital to its investment bank, giving current management some breathing room from Mr Bramson. Still, the bank’s shares closed stubbornly down 3 per cent on Friday, at 166.94p. Mr Staley survived an unrelated investigation by the UK’s two financial regulators into his attempt to unmask the identity of a whistle-blower. The regulators fined him £642,430 earlier this year but allowed him to keep his job. That appeared to be water under the bridge on Thursday night, when he sat on the top table at the annual dinner of regulators at the Lord Mayor of London’s Mansion House, in pride of place next to Andrew Bailey, the Financial Conduct Authority’s chief executive. The reasoning behind Lord Justice Davis’s decision cannot be reported before the individuals’ trial. Barclays is not completely out of the woods over the 2008 transactions. The side deals with Qatar sparked not only the SFO probe but also a regulatory inquiry from the FCA, which has examined whether the bank properly disclosed fees it paid to Qatar, and whether it secretly lent money to Qatar to reinvest in the bank. The FCA stayed its case pending the SFO investigation. The US Department of Justice and Securities and Exchange Commission are also investigating the matter. The arrangements have also prompted a $1.5bn lawsuit from Amanda Staveley, the financier who put the Abu Dhabi investment together, and a whistleblowing claim from Richard Boath, a co-defendant of Mr Varley’s who headed Barclays’ corporate finance business in 2008. Mr Varley and Mr Boath will be joined in the dock by Roger Jenkins, the rainmaker who negotiated the capital-raising, and Tom Kalaris, a trusted lieutenant in the investment-banking business. The jury trial is expected to last around four months. The bank faced a fine potentially in the hundreds of millions of pounds had the case against it proceeded to trial and if a jury had found it guilty. Voluntary bills of indictment are rare and enable prosecutors to reinstate criminal charges if they have previously been scrubbed. But to avoid double jeopardy they can only be granted if there is fresh evidence, if a judge has erred in law or if there has been another procedural irregularity. There have been just a handful of applications for voluntary bills in recent years. The SFO’s previous attempts to reinstate allegations in three other cases failed including most recently in 2014 when the SFO failed to restore charges in a fraud prosecution against two former directors of Celtic Energy, a Welsh mining company. Get alerts on Serious Fraud Office UK when a new story is published Copyright the Financial Times Limited 2018. All rights reserved.

2 Responsesso far.

  1. Assisted me a lot, just what I was looking for : D.

  2. I wanted to put you the tiny note so as to say thanks once again for your personal gorgeous information you’ve discussed at this time. It is generous of people like you giving freely precisely what many people would’ve made available as an electronic book to help make some dough for themselves, most notably seeing that you might have done it if you ever decided. The inspiring ideas likewise worked to be a good way to fully grasp most people have the same fervor similar to my very own to know the truth whole lot more pertaining to this issue. I’m certain there are numerous more pleasurable instances in the future for people who looked at your site.

Leave a Reply

Your email address will not be published. Required fields are marked *