Top executives at Barclays agreed to lie about the payment of hundreds of millions of pounds to Qatar in 2008 in order to secure “vital” investments for the bank and avoid a public bailout that would place it under UK government control, a court has heard.
The claims were made in an opening statement by prosecutors for the Serious Fraud Office (SFO) in the second trial against three former Barclays bosses. It is the only criminal case in Britain to be brought against banking executives for their actions during the financial crisis.
The former Barclays investment banking chief Roger Jenkins, the former head of the wealth division Thomas Kalaris and Richard Boath, a former head of Barclays’ European financial institutions, face charges of fraud as well as conspiracy to commit fraud. All three deny the charges.
“This case is about the conduct of the three defendants at the time of the financial crisis in 2008 … In response to the pressures imposed by what was a global banking crisis, they agreed between themselves that lies should be told to the market in order to ensure that vital investments into Barclays were secured,” the SFO prosecutor, Ed Brown, told a jury at the Old Bailey in London.
The SFO has alleged that the former Barclays executives disguised £322m in payments to Qatar in order to secure £11bn of emergency funding in 2008. The bankers are accused of putting together two so-called advisory services agreements (ASAs) in order hide the payments, which were not offered to other investors, but were demanded by the Qataris in exchange for their participation.
“Those agreements … were not genuine agreements for advisory services. They were mechanisms to hide additional fees being paid to the Qataris for their investment,” Brown said.
The jury, which was sworn in on Tuesday morning, heard that the bankers were trying to avoid the kind of public bailouts that would eventually bring Lloyds and Royal Bank of Scotland under government control.
“Barclays was very anxious to avoid accepting government money, thereby placing itself under greater government control and scrutiny. It is no exaggeration to say that Barclays’ future as an independent bank was in jeopardy in September and October of 2008,” Brown said. “They acted dishonestly, say the prosecution, in order to preserve the future of the bank and to preserve their own positions.”
A previous trial involving all three executives came to a close in April, when the jury was discharged following four months of court proceedings. The former Barclays chief executive John Varley was a co-defendant in that trial, but he was acquitted by an appeals court in June.
Barclays’ former finance director Christopher Lucas would have also faced charges in the latest case if he was fit to stand trial. He was not named as a defendant owing to an ongoing illness, the prosecution said.
The trial is expected to last four to five months.