Barclays wooed Qatar’s former PM to secure billions
Even by the exotic standards of Italy’s Costa Smerelda where playboy millionaires party with film stars by the sparkling azure waters, there was little to match the raw economic power of the two men sitting down for dinner on board one luxury yacht.
The guest list for the July 2007 gathering on the northern coast of Sardinia included Roger Jenkins, one of Britain’s best-paid bankers, and Sheikh Hamad bin Jaber Al Thani, prime minister, foreign minister and head of Qatar’s sovereign wealth fund at the time.
By one account, the two men had been brought together through the friendship between their wives. Another suggested the dinner came after a chance meeting with the Tunisian socialite Afef Jnifen, a friend of Sheikh Hamad.
After dinner, the two men chatted and swapped notes about investments in British-based supermarket chains.
But for Mr Jenkins, it was just the start of a process of wooing the man holding the pursestrings to Qatar’s gas and oil fortune.
What Mr Jenkins did not foresee was that the convivial meeting on the yacht would land him 12 years later in a London criminal court to join a group of the most senior bankers to be prosecuted over the fallout from the 2008 global financial crisis. He was acquitted on Friday.
By the time of the meeting, Mr Jenkins was known for his ferocious work-ethic and 90hour working weeks at Barclays while jetting between his home in Malibu, California, the Gulf, London and South Africa.
The fiercely intelligent former international athlete had run the bank’s tax division and was on course for a £36 million (Dh169.5m) bonus that year.
He was also one half of a power couple. His wife Diana, was an indefatigable figure on the charity fund-raising circuit.
But now Mr Jenkins faced the challenge of securing Qatari funds that would be desperately needed as the world was about to lurch into a financial crisis.
The first indications of just how bad it would get came the following month when banks stopped doing business with each other as the scale of the crisis in the subprime mortgage sector became clear.
It would take a year before the crisis came to a head when Lehman Brothers went bankrupt in September 2008.
UK regulators demanded that banks increase their levels of capital and Barclays had already identified Middle East sovereign wealth funds as potential sources of investment.
Their efforts had made little headway, opening up rivalries in the senior team.
Bob Diamond, the head of the bank’s investment banking division and later chief executive, had unsuccessfully tried to secure regional backers.
Mr Jenkins thought that he was going about it the wrong way, the court heard. Mr Jenkins would later tell colleagues that he played the long game with Sheikh Hamad in an attempt to secure funds from the sovereign wealth fund of about $300 billion (Dh1.1trillion).
The men held further meetings in Cannes in the south of France, in Doha and in California. Mr Jenkins claimed they became close friends.
During the meeting in California, Sheikh Hamad confided in Mr Jenkins that he had received numerous approaches from banks and would soon finalise plans to take advantage of the weakness in the sector. “He wants to be our special Gulf guy,” Mr Jenkins told colleagues in an email.
At the start of the discussions with Qatar, Barclays felt its hand was strong. Chief executive John Varley was against giving Qatar the impression a deal would prop up the bank.
“We have been a winner in the turmoil and we have no need of a prop-up,” Mr Varley told Mr Jenkins.
“So everything we do with them needs to reflect that fact.”
Mr Varley had sought to change the direction of the banking group so that three quarters of its income and profit came from sources outside the UK. He had looked enviously towards the Gulf since late 2007 where some rival banks had secured considerable returns, unlike Barclays.
Mr Jenkins had told him that Sheikh Hamad was willing to invest in Barclays.
But the Qataris were known to be tough negotiators. Over three days in May, Mr Varley joined Sheikh Hamad for discussions and dinners at Mr Jenkins’s £5m home in west London to lay down the basis for their future co-operation and then met again at the Four Seasons Hotel in the UK capital.
But 11 days later, the Qataris upped their demands for investing billions in the bank. They wanted a commission of 3.75 per cent, more than double what the bank was proposing to pay other investors.
They settled on 3.25 per cent and the bankers wrestled with the problem of how to pay the Qataris what they wanted.
By November 2008, the bank secured more than £11 billion from investors – with Qatar the largest investor with £4bn.
During the talks, Mr Jenkins suffered a heart attack but returned swiftly to help seal the deal. The highest ranks at Barclays were delighted. Mr Varley wrote to Mr Jenkins and called him a “magician”.
The board recommended him for a £25m bonus.
And then it turned sour.
As the markets calmed after the worst of the financial turmoil, questions over the fund-raising led Britain’s financial watchdog to conclude that Barclays had “acted recklessly” over its failure to disclose key details and fined the lender £50m. The bank is challenging the finding.
It tipped off the Serious Fraud Office in 2012, which started its own criminal inquiry.
It resulted in the bank, Mr Varley and the three executives all being charged. The bank mounted a vigorous defence and refused to hand over documents until it was threatened with being raided.
The SFO wrote to the Qataris but never got anything useful from the state’s officials. A judge criticised the SFO for failing to take all necessary steps to gather documents from the lawyers of the Qatari investors.
The biggest blow for investigators came when the criminal case against the bank was thrown out before it came to trial. But they pressed ahead with prosecuting individual directors, even though finance director, Chris Lucas, who had Parkinson’s disease, was deemed too ill to stand trial.
There were further delays when a judge ruled there was insufficient evidence to proceed against Mr Varley.
The case started in late 2019 with just three executives in the dock. More than 12 years after the dinner party on the Mediterranean that started the ball rolling to the capital raising, the jury delivered its verdicts.