LONDON: Barclays and four former top executives were charged with fraud on Tuesday over undisclosed payments to Qatari investors as part of a 拢12 billion ($15 billion) emergency fundraising during the financial crisis in 2008.
Britain鈥檚 Serious Fraud Office (SFO) charged Barclays Plc, former Chief Executive John Varley, Roger Jenkins, Tom Kalaris and Richard Boath with conspiracy to commit fraud and unlawful financial assistance in its first criminal prosecution of a bank and senior managers over events during the credit crisis.
Barclays said it was considering its position and awaiting further information about the charges, which follow a five-year inquiry into how it avoided the fate of Lloyds and Royal Bank of Scotland (RBS) by averting a state bailout.
The SFO charged Varley, Jenkins, the ex-chairman of its Middle East investment banking arm, Kalaris, a former CEO of the bank鈥檚 wealth division and Boath, a former European head of financial institutions, after investigating a two-part fundraising that included a $3 billion loan to Qatar.
A lawyer for Jenkins said he would 鈥渧igorously defend鈥� himself, adding his client had received both internal and external legal advice at the time.
Boath said he had no case to answer as he had repeatedly raised concerns about decisions taken by the bank at the time with both senior management and senior lawyers and had been reassured the decisions were lawful.
鈥淭he SFO鈥檚 decision to charge me is based on a false understanding of my role and the facts. I was not a decision-maker and had no control over what the bank did in 2008,鈥� he said in a statement.
鈥淭he evidence I have supplied is very clear: There is no case for me to answer.鈥�
A lawyer representing Varley, who resigned as a Rio Tinto senior independent director with immediate effect following the SFO charges, declined to comment. A lawyer for Kalaris could not immediately be reached for comment.
Each offense of fraud by false representation carries a maximum jail sentence of 10 years. Barclays faces a fine.
The men have been told to appear before Westminster Magistrates鈥� Court on July 3.
The case centers on agreements between Barclays and Qatari investors during two fundraisings in June and October 2008.
Qatar Holding, part of the Qatar Investment Authority (QIA) sovereign wealth fund, and Challenger, an investment vehicle of former Qatari Prime Minister Sheikh Hamad bin Jassim bin Jabr Al-Thani, invested around 拢5.3 billion in Barclays.
Authorities have examined whether payments from Barclays to Qatar at the same time, such as around 拢322 million in 鈥渁dvisory services agreements鈥� (ASA), alongside the $3 billion loan, were honest and properly disclosed.
Varley and Jenkins have been charged with conspiracy to commit fraud by false representation during the June 2008 capital raising as well as the November 2008 fundraising. They also face a charge of unlawful financial assistance.
Kalaris and Boath have been charged with conspiracy to commit fraud by false representation during the June capital raising, the SFO said.
Qatar, which is a major UK investor, has not been accused of wrongdoing.
The criminal charge is a reputational blow to Barclays, which is grappling with a string of other legal problems.
In a separate case, it is contesting a $1 billion civil lawsuit from businesswoman Amanda Staveley, who arranged an investment in Barclays from Abu Dhabi investors during the financial crisis.
In 2013 the Financial Conduct Authority (FCA) proposed a 拢50 million fine over how Barclays made disclosures about its dealings with Qatar in an investigation that has been on hold pending the outcome of the SFO鈥檚 probe.
鈥淲e are pleased that this matter, which led to the stay of our own case, is now in the public domain. We welcome a fair and transparent hearing on the basis of the charges set out today by the SFO,鈥� it said in a statement.
Away from Qatar, Barclays current CEO Jes Staley, who joined the bank in late 2015, is under investigation for attempting to unmask an internal whistleblower.
Qatar, meanwhile, has made a healthy profit from its investment and remains Barclays鈥� biggest shareholder, with a stake of around 6 percent, according to Thomson Reuters data.