Why has Barclays been charged?
20 June 2017
Barclays PLC and four former executives have been charged with fraud over their actions in the 2008 financial crisis. The Serious Fraud Office case relates to the billions of pounds the bank raised from Qatari investors, enabling it to avoid a government bailout. But what happened nine years ago and why have the company's actions been investigated? There was a global financial crisis in 2008 and the financial markets plunged into chaos when the US government allowed the investment bank Lehman Brothers to go bankrupt. This was an unprecedented incident and led to a chain of events including the value of shares in other US banks plummeting. The problems rapidly spread around Western countries with the Republic of Ireland going into recession and three Icelandic banks collapsing, and, in the UK, the government having to rescue several banks including Lloyds and Royal Bank of Scotland. Barclays decided to go down a different path - and it is that decision that has led to the charges that it now faces. Barclays decided not to rely on the taxpayer and boosted its coffers by raising PS4.5bn in June 2008 and another PS7.3bn four months later from a number of investors including state-owned investment fund Qatar Holdings. The SFO investigation has been looking into exactly what Barclays paid to the Qatari investors for their participation in the October deal. A total of PS346m in advisory fees was paid to Qatar Holding. Barclays also loaned PS2bn to the state of Qatar only weeks after announcing the fundraising deal with the government-backed investment fund. Under the Companies Act 1985, it is unlawful for a bank to lend itself money - the legal term for which is financial assistance. Barclays has denied in court documents that the two transactions were linked. The SFO has charged Barclays PLC, not the bank, and four former employees, including ex-chief executive John Varley, with fraud in relation to the June fund raising. In addition, Mr Varley and Mr Jenkins have also been charged with the same offence in relation to the October 2008 fund raising and with providing unlawful financial assistance. The SFO questioned 44 people during its five-year investigation into the case. The four who have been charged all held senior roles during their time at the bank, but no longer work there. John Varley, aged 61, was chief executive at Barclays between 2004 and 2011. Roger Jenkins, 61, was the executive chairman of investment banking and investment management in the Middle East and North Africa. Thomas Kalaris, 61, was chief executive of Barclays wealth and investment management. Richard Boath, 58, was European head of financial institutions group. The defendants will appear at Westminster Magistrates Court at 14:00 BST on 3 July. Messrs Jenkins and Boath have both pledged to defend themselves against the charges, but there has been no comment yet from either of their other ex-colleagues. Barclays has said it is considering its position and awaiting further details. However, this may not be the end of the matter as the Financial Conduct Authority (FCA) has reopened its investigation into the deal and is understood to be reviewing new evidence which could prompt it to reconsider a PS50m fine against the banking giant four years ago, which had been put on hold.
Barclays decided not to rely on the taxpayer and boosted its coffers by raising PS4.5bn in June 2008 and another PS7.3bn four months later from a number of investors including state-owned investment fund Qatar Holdings. The SFO investigation has been looking into exactly what Barclays paid to the Qatari investors for their participation in the October deal. A total of PS346m in advisory fees was paid to Qatar Holding. Barclays also loaned PS2bn to the state of Qatar only weeks after announcing the fundraising deal with the government-backed investment fund. Under the Companies Act 1985, it is unlawful for a bank to lend itself money - the legal term for which is financial assistance. Barclays has denied in court documents that the two transactions were linked.
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What did Barclays do?
The SFO has charged Barclays PLC, not the bank, and four former employees, including ex-chief executive John Varley, with fraud in relation to the June fund raising. In addition, Mr Varley and Mr Jenkins have also been charged with the same offence in relation to the October 2008 fund raising and with providing unlawful financial assistance.
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What are the charges?
The SFO questioned 44 people during its five-year investigation into the case. The four who have been charged all held senior roles during their time at the bank, but no longer work there. John Varley, aged 61, was chief executive at Barclays between 2004 and 2011. Roger Jenkins, 61, was the executive chairman of investment banking and investment management in the Middle East and North Africa. Thomas Kalaris, 61, was chief executive of Barclays wealth and investment management. Richard Boath, 58, was European head of financial institutions group.
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Who are the accused?
The defendants will appear at Westminster Magistrates Court at 14:00 BST on 3 July. Messrs Jenkins and Boath have both pledged to defend themselves against the charges, but there has been no comment yet from either of their other ex-colleagues. Barclays has said it is considering its position and awaiting further details. However, this may not be the end of the matter as the Financial Conduct Authority (FCA) has reopened its investigation into the deal and is understood to be reviewing new evidence which could prompt it to reconsider a PS50m fine against the banking giant four years ago, which had been put on hold.
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What happens next?