- Barclays executives were “rumbled” by Qatari investors during the bank’s emergency fundraising in 2008, a conversation played in court Friday indicates.
- In their case against the executives over allegations related to the crises-era events, prosecutors said the bank created an internal memo designed to provide a misleading “audit trail.”
- Alongside tough negotiations with Qatari investors, Barclays executives suggested they also had difficult negotiations with Chinese investors: “These Chinese are porking us,” the court heard.
- The defendants, including the bank’s former CEO John Varley and coworkers Roger Jenkins, Thomas Kalaris, and Richard Boath, have all pleaded not guilty to all charges.
Key Barclays executives were “rumbled” by their negotiations with Qatari investors during the bank’s capital-raising exercise during the financial crisis, a Southwark Crown Court heard Friday.
It’s week one of the case, in which the UK’s Serious Fraud Office alleges that then-CEO John Varley and the three other defendants, Richard Boath, Thomas Kalaris, and Roger Jenkins, misled investors in fundraisings during the financial crisis by paying Qatari companies £322 million in secret fees that were not properly disclosed.
The defendants pleaded not guilty to all charges.
The prosecution alleges that Barclays executives were concerned about their dealings with the Qataris and made repeated references to spending time in jail, a continuation of recorded conversations that were played to the courtroom Thursday.
“There’s obviously the jeopardy is that we’re rumbled and people say well that was bulls—, you know, this is just a fee in the backdoor,” said Boath, then the European head of Barclays’ financial-institutions group, in a June 11, 2008, call to Kalaris, who headed the bank’s wealth division at the time, that was played to the court.
The jury also heard Kalaris say, in the same call: “I don’t want to go to jail.”
Prosecutors also accused Barclays of creating an internal memo on June 13, 2008, about its dealings with Qatar that they said was designed to lay a misleading “audit trail.”
The memo said the Qataris “would be content with the fees of 1.5% for their £2 billion commitment,” something the prosecution said was misleading.
The court also heard a June 18, 2008, phone conversation between Boath and two senior lawyers at Barclays: Judith Shepherd and Matthew Dobson. During the call, Boath acknowledged deleting an email from Sheikh Hamad, then a potential Qatari investor, about extra fees.
In additional talks between Boath and Jenkins, formerly executive chairman of investment management for MENA at Barclays Capital, played to the court from later that June 2008 day, they discussed the possibility of reengaging other investors at a higher fee level so as to avoid paying the Qataris a higher fee than other investors.
“I think the best thing to do is, Chinese don’t come in, we basically start again, we get the Chinese back at the table, 3% fees, Chinese come in, everybody comes in, we disclose 3% fees, we don’t have any of this s—, none of us is going to be jailed,” Boath said.
Varley, who was Barclays’ CEO at the time, was mentioned as part of discussions centered on the bank’s potential agreement with Qatar, which included the possibility of Sheikh Hamad, then the Qatari prime minister, providing advisory services.
“It’s wrong of a prime minister to take a fee” for his advice to a bank, Jenkins said in another call played to the jury from June 18, 2008.
Jenkins added: “I’m very surprised that John Varley, given his ethics, is doing this.”
Phone conversations between Shepherd and Boath on June 23, 2008, which were played to the court, discussed the terms between Barclays and Qatar in a proposed “advisory services agreement.”
The Qataris were unhappy with the proposed wording, Boath said: “He doesn’t like it, won’t sign it, they’re not having any of that crap in it.”
Shepherd outlined that Sheikh Hamad would have to give the services in exchange for the fee because “otherwise you are going to end up in front of the Fraud Squad explaining why.” To which Boath responded, “No, I’ve got a house in Brazil, there’s no extradition treaty, I’m off.”
The trial at Southwark Crown Court is ongoing and could last up to six months.
Business Insider Emails & Alerts
Site highlights each day to your inbox.