Bank’s legal team said to have ‘persuaded themselves’ that agreement in 2008 was lawful
A senior Barclays banker raised red flags over the terms of a multibillion-pound fundraising deal with Qatar and said the company’s lawyers “persuaded themselves” that the 2008 agreement was legal, a court was told on Wednesday.
Ed Brown QC, prosecuting on behalf of the Serious Fraud Office (SFO), told a jury at Southwark crown court that Richard Boath, an executive in Barclays’ investment banking division, was immediately concerned about how the bank would get away with paying extra fees to Qatar without offering similar terms to other investors.
In interviews with SFO investigators, Boath said: “You couldn’t have a deal with one party that you didn’t have with somebody else” and “it would be wrong if you didn’t disclose it … because you’d be treating people unfairly – that’s the principle of capital markets, that’s how it works.”
Brown said the banker “pushed back hard on the idea of different ‘sets of economics’ for different investors” and told colleague Roger Jenkins “that the other investors would go nuts if they found out that Barclays had done ‘a deal on the side or a sweetheart deal’”.
Jenkins, the former head of Barclays Capital known to his colleagues as “big dog”, is said to have replied: “Fuck that, I’m not taking a hit to save John and Bob’s job,” referring to chief executive John Varley and then-CEO of Barclays Capital’s investment banking division, Bob Diamond. That was before further calls were made that eventually drew in the Barclays legal team.
The prosecution said about £322m in additional fees were eventually presented as two advisory service agreements – under which Barclays was to make payments to Qatar on the basis that it would provide certain services to the bank in return.
The SFO alleges that the agreements helped “disguise” Qatar’s demand for higher commission payments in exchange for the investments in 2008 that helped the lender avoid a government bailout at the height of the financial crisis.
Boath claimed the legal team convinced themselves the agreements were legitimate, as long as those services were eventually provided, the jury heard.
“I don’t think there were any lawyers working on it that didn’t know there were additional fees, but they had persuaded themselves that provided we get value for services, we’re able to enter into a separate agreement with the Qataris,” he told the SFO, according to the prosecution.
Boath added: “The bank satisfied itself that it was going to get value for those services. The bank therefore satisfied itself that it was legal.”
The SFO alleges that the four former Barclays executives – Varley, Boath, Jenkins and Tom Kalaris, who headed the bank’s wealth team – lied to the stock market and other investors about how fees were paid to Qatar in relation to emergency fundraising of more than £11bn.
All of the men deny the charges.
The prosecution completed its opening statement, which took six days, on Wednesday and is expected to start providing evidence from Thursday.
The trial – which is expected to last up to six months – continues.
