Barclays and a number of its former executives are expected to learn this week whether the Serious Fraud Office intends to bring criminal charges in relation to emergency fundraising at the height of the financial crisis.
The five-year SFO investigation has focused on the events surrounding cash injections from an arm of Qatar’s sovereign wealth fund. Speculation is growing that the SFO will press ahead with charges, and there have been reports that an announcement could come as soon as Tuesday.
Decisions have been delayed on a number of occasions. The deadline was initially the end of March,, then the end of May and then the end of June. The SFO has confirmed that the latest timetable is on track.
The investigation was announced in August 2012. The stakes are high, not only for the individuals involved and the bank itself, which has been trying to restore its reputation after a series of scandals, but also for the SFO and its head, David Green. The Conservatives’ election manifesto pledged to fold the SFO into the National Crime Agency.
No bankers have faced criminal charges in the UK for events that took place during the financial crisis, and UK authorities have not pursued criminal charges against a high street bank.
The SFO has provided little detail about its investigation, but Barclays has been required to make disclosures in its formal stock exchanges announcements. These show that the focus has been on “advisory services agreements” between Barclays and Qatar Holding, an investment vehicle for the Gulf state, which bought shares in the bank during two fundraisings at the height of the financial crisis. In 2008 Barclays raised £4.5bn in June then a further £7.3bn in October from a number of investors including Qatar Holding.
In documents accompanying the June fundraising, Barclays disclosed the arrangement with Qatar but did not put a value on the deal. The bank did not disclose the arrangement in the October documentation. Barclays has since said the fees amounted to £332m payable over five years.
In September 2013 Barclays revealed that the Financial Conduct Authority intended to fine the bank £50m for reckless behaviour by breaching disclosure rules. The bank contests the findings, and these regulatory proceedings have been stayed while the criminal investigation continues.
When Barclays first announced it was being investigated by the City regulator in 2012, it disclosed that Chris Lucas, then its finance director, was one of “four current and former senior employees” being investigated. Lucas left on health grounds in 2013.
It has been reported that during its pursuit of the case the SFO has questioned 44 individuals, including John Varley, the former chief executive.
Roger Jenkins, the high-profile banker who left Barclays in 2009 and reputedly was paid £40m during one of his years at the bank, was credited with playing a key role in introducing the Qatar investors to the fundraising.
There had been expectations that Barclays would be offered a deferred prosecution agreement (DPA) – a form of settlement – similar to those offered to Rolls-Royce, which paid £671m to settle its case, and Tesco, which was fined £129m as part of a DPA. But this now seems unlikely.
There are two other cases connected to the SFO investigation. Amanda Stavely, an adviser to the UAE’s Sheikh Mansour bin Zayed al-Nahyan, who put more than £3bn into the October 2008 financing, has brought a civil action claiming fees for her PCP advisory vehicle.
Richard Boath, a former top banker at Barclays, has brought a claim to an employment tribunal. He argues he was unfairly dismissed after the SFO shared with his employer a 900-page transcript of interviews he gave to criminal investigators. Barclays denies wrongdoing in both cases.
