Barclays hit as SFO extends Qatari loan charges action

● Serious Fraud Office targets Barclays Bank operating arm as well as Plc

Serious Fraud Office (SFO) turned the screw on Barclays yesterday when it charged its operating subsidiary with providing unlawful financial assistance to Qatari investors during the banking crisis a decade ago.

The SFO levelled the same charge against the bank’s holding company Barclays Plc last July after a five-year probe. But lawyers and analysts said yesterday that charging the operating unit Barclays Bank as well was significant because it holds the banking licence that allows the bank to operate in different countries.

Barclays denies the SFO’S allegation that a $3 billion (£2.2bn) loan made to sovereign wealth fund Qatar Holdings in November 2008 was linked to a larger Qatari investment in the UK bank that helped it avoid going to the British taxpayer for a bailout as Lloyds and Royal Bank of Scotland were forced to do.

Public companies in the UK are banned from lending money for the purchase of their own shares, known as unlawful financial assistance.

The SFO said in its statement yesterday: “The charges relate to financial assistance Barclays Bank gave to Qatar Holdings beween 1 October and 30 November 2008, which was in the form of a $3bn loan for the purpose of directly or indirectly acquiring shares in Barclays Plc.”

In response, Barclays issued a statement saying that both the holding company and its operating arm intended to defend the respective charges.

It said: “Barclays does not expect there to be an impact on its ability to serve its customers and clients as a consequence of the Charge having been brought.”

Qater, a big investor in the UK with property and other assets, has not been accused of wrongdoing.

The SFO declined to comment about the delayed timing of the charges, but authorities can only file them if the evidence is sufficient for a “realisthe tic prospect of conviction”, and if prosecution is in the public interest.

Michael Potts, a partner at law firm Byrne & Partners, said the latest move “signals a belief on the part of the SFO that they can evidence an unlawful intention in the actions of the officers of the bank when they entered into the loan arrangements.

“The defences to this offence are quite narrow and the SFO may believe that the bank will struggle to identify and prove a good faith purpose.”

In July, the SFO brought fraud charges against four former executives, including John Varley, the chief executive at the time of the Qatar transactions, as well as the holding company, Barclays Plc.

It marked the first criminal charges to be brought in the UK against a bank and former executives for activities in the financial crisis.

That trial is due to start next January, but the fraud charge has not been made against Barclays Bank. There is no date set for the first court appearance on yesterday’s charge.