Nine years on, bosses at Barclays in the dock

Four former executives charged with fraud over 2008 meltdown

FOUR former Barclays bosses yesterday became the first senior bankers to face criminal charges over their conduct during the financial crisis.

The Serious Fraud Office announced charges against the High Street giant and its former senior executives for conspiracy to commit fraud.

The charges relate to £346million in payments made to Qatari investors to secure almost £12billion in emergency funds. Barclays and its executives are accused of failing to properly disclose these payments to its shareholders.

They are also accused of ‘unlawful financial assistance’ by providing Qatari investors with a £2.3billion loan to buy Barclays shares.

Among those who will be hauled into the dock on July 3 are former chief executive John Varley, who became a City darling after helping steer Barclays through the credit crunch without taxpayer support.

He and former Middle East chief Roger Jenkins face up to 22 years in jail if found guilty on all counts.

Thomas Kalaris, who ran the bank’s wealth and investment management unit, and former financial institutions boss Richard Boath were charged over the fundraising deal only and could be jailed for ten years if found guilty.

The SFO decision was described by an MP as a ‘long time coming’.

And last night one Tory MP said the public would question why other senior executives at bailed out banks such as Royal Bank of Scotland had got off ‘scot- free.’

This sentiment was echoed in the City, with one commentator saying he was ‘appalled’ the bosses of taxpayer-backed banks had not been brought before the courts.

A number of traders have been charged for rigging Libor interest rates, with several jailed for fraud. But senior executives have escaped punishment. Mr Varley is believed to be the first chief executive of a major UK bank to face criminal charges in modern times.

But other prominent figures have not been charged, including Mr Varley’s successor Bob Diamond – among 45 individuals questioned by the SFO in its five-year probe.

Barclays is the first major High Street bank to face criminal prosecution since the SFO was set up in 1988. It faces two charges of fraud by false representation over the deals, which could result in a fine of hundreds of millions of pounds.

The charges centre on two fundraising drives in 2008, as Barclays battled to save itself from a bailout by taxpayers. It was desperate to avoid state control, which could have included curbs on bonuses.

In June 2008, the bank persuaded Qatar to pump in £4.5billion, for a stake of around 10 per cent. The money came from Qatar Holding, part of Qatar’s sovereign wealth fund, and Challenger Universal, an investment vehicle owned by Qatar’s then prime minister.

In October, secured billions more from the Qataris, taking the nation’s stake up to 15.5 per cent.

Barclays has been accused of failing to fully inform shareholders about £346million in fees paid to Qatari investors. The bank, Mr Varley and Mr Jenkins also face a charge of ‘unlawful financial assistance’ over a £2.3billion loan it is said to have made to Qatar shortly after the second investment.

Labour MP John Mann, ex-member of the Treasury committee, said: ‘This is a huge moment which has profound implications … It’s been a long time coming. Most of the country has suffered and is still suffering from the financial crisis … a consequence of the reckless behaviour of bankers.’

Lord Myners, City minister from 2008 to 2010, said the deal involved a ‘huge level of hubris and arrogance’ and that Barclays bosses had been ‘vehement’ that they did not want a Government bailout.

He told BBC Radio 4’s Today this was partly because ‘they realised the terms we were imposing meant pay for their senior bankers, and bonuses and options, were going to be substantially reduced’.

The Financial Conduct Authority and US Department of Justice have also been investigating the bank’s payments to Qatar.

Barclays said it is ‘considering its position in relation to these developments’. A lawyer for Mr Jenkins said he ‘intends to vigorously defend against these charges’, adding that he sought and received legal advice on each of the matters covered by the accusations.

Mr Boath said he would ‘contest these charges vigorously’, adding: ‘The SFO’s decision to charge me is based on a false understanding of my role and the facts.’

Mr Varley and Mr Kalaris could not be reached for comment.