Ex-barclays boss could face jail in fraud probe

HBOS and Lloyds behaved far worse – but a decade after the financial crisis, the Mr Bigs aren’t punished

The former boss of Barclays, John Varley, faces a maximum 22-year prison sentence after he and three other ex-directors of the lender became the first British bankers to face criminal charges for actions taken during the financial crisis. The Serious Fraud Office has charged the bank with fraud and unlawful financial assistance over its dealings with Qatari investors. The bank could be fined.

These are tough times for those who believe in markets and capitalism, and the prosecution by the Serious Fraud Office of Barclays and four of its former executives is potentially another setback, as yet again senior bankers are accused of wrongdoing.

I am sure I am not the only person who, relatively speaking, cannot get terribly exercised as to whether Barclays bent the rules in its fundraising with Qatar in 2008 in order to avoid going bust. Whatever the outcome, if there has been a crime, it is hard to discern the real victims.

If Barclays had gone bust it would have required bailing out by the taxpayer. The bank would have become a ward of state. Shareholders would have been wiped out. As it stands, it escaped like a greased piglet evading the clutches of the butcher.

How peculiar, then, that the SFO has spent five years pursuing Barclays while numerous others who presided over the financial crisis, costing or losing millions of people money, have apparently escaped scot free or only faced legal sanction thanks to the efforts of private citizens, journalists and politicians.

The really massive issues occurred at RBS, which effectively went bust after foolishly purchasing the Dutch bank ABN Amro; and HBOS, which collapsed and fell into the arms of Lloyds Bank, almost bringing that institution down with it. Both RBS and HBOS clearly had, historically, deficient cultures and controls and senior executives who made mistake after mistake – yet very few seem to have been held accountable, except through the valiant efforts of their victims.

At RBS, an action group made up of 9,000 shareholders has bravely pursued the bank though the courts claiming the prospectus for a rights issue to support its balance sheet after the ABN Amro acquisition omitted to disclose the truly parlous state of its finances. That case is close to settling after the bank has reportedly offered £200 million in compensation, but a plucky few are apparently still refusing to give up, determined that former chief executive Fred Goodwin should be called to the witness box.

HBOS, you may recall, had an infamous scam run out of its Reading Office in which small businesses were improperly loaded with debt and then referred by HBOS banker Lynden Scourfield to a turnaround consultancy called QCS in return for gifts, payments, holidays and prostitutes. Many of these businesses went bust, costing owners their livelihoods, and Mr Scourfield, a colleague and four associates are now in jail after a successful prosecution by Thames Valley Police.

What is not commonly appreciated is the only reason this fraud was properly investigated is due to a campaign by victims, including Nikki and Paul Turner, whose record label was driven into the ground by the miscreants, and the fact it was taken up by Conservative politicians, including Sir James Paice, the now-retired MP for South East Cambridgeshire, and Anthony Stansfield, the Police and Crime Commissioner for Thames Valley.

Mr Stansfield is critical of the SFO for failing to pursue the HBOS fraudsters. “If Thames Valley Police had not taken on this case no one else would have, and the crime would not have been investigated,” he says.

The next trial in a civil case, which one would have thought merited more attention, is by Lloyds shareholders and set for October. They claim that Lloyds failed to disclose the trouble HBOS was in when they were recommended to approve the merger in 2008.

We should contrast the situation here not only to America, where the likes of Bernie Madoff and Allen Stanford were speedily convicted of offences, but also to our history. In the economic crisis of the 1930s, fraudsters such as Clarence Hatry, whose investment trust empire collapsed, and Lord Kylsant, who issued a false prospectus on behalf of the Royal Mail Steam Packet Company, were zealously prosecuted and sent to prison.

Is it any wonder that, a decade after the financial crisis, public anger is still raw when the authorities fail to pursue the Mr Bigs of the financial crisis and instead leave it to victims and campaign groups to ensure wrongdoers are held accountable for their actions?