- The UK’s Serious Fraud Office alleges that former Barclays CEO John Varley and other executives misled investors in raising funds during the financial crisis.
- Barclays executives worried in 2008 that if people found out about the bank’s crisis-era payments to Qatari investors, they would think the deals were a “bung,” a court heard Wednesday.
- The defendants, including the bank’s former CEO John Varley and coworkers Roger Jenkins, Thomas Kalaris, and Richard Boath, all pleaded not guilty to charges of misleading investors in the fundraising.
Barclays executives worried in 2008 that if people found out about the bank’s crisis-era payments to Qatari investors, they would think the deals were corrupt, a London court heard Wednesday.
Richard Boath, former head of Barclays’ European financial institutions group, was alleged to have lost sleep at the thought of journalists finding out about the £322 million paid to Qatari companies.
The millions in payments are at the heart of the trial in which the UK’s Serious Fraud Office (SFO) alleges that former Barclays CEO John Varley and other executives misled investors in raising the funds.
The executives said in conversations heard by the court that they negotiated the deals to inject capital into the bank and prevent nationalization at the dawn of the financial crisis.
In week two of the case, the court heard testimony of Boath’s description of the deals. The following exchange, published in court documents, is from a June 2008 phone call which took place between Boath and Barclays lawyer Judith Shepherd:
Boath: “My worry is every journalist just gets it and says this is you know.”
Boath: “Well I hate to use the phrase so I’m not going to use it.”
Shepherd: “No, no, no, because we don’t even think that phrase, it’s just words that never come across our lips”
Boath: “It begins with a ‘B.'”
During interviews with the SFO under caution in 2014 and 2016, Boath said the ‘B’ word was probably “bung.” When asked, what his understanding of the meaning of the word “bung” was, Boath said it meant a corrupt payment.
The court heard that Boath told Shepherd that when he reread the Qatari agreement: “I sort to start to tremble. So, you know, I’d really like to go and do something about it, so I can sleep.”
The SFO alleges that then CEO Varley and the three other defendants, Boath, Thomas Kalaris, and Roger Jenkins, misled investors in fundraisings during the financial crisis by paying Qatari companies £322 million ($US423 million) – a 3.25% commission – in secret fees that were not properly disclosed. The defendants pleaded not guilty to all charges.
“Senior management of the bank was extremely anxious to avoid being nationalized”
Barclays executives were concerned about the possibility of a government bailout in the midst of the financial crisis after Northern Rock had been nationalized in 2007. The American banks Bear Stearns and Lehman Brothers were also set to collapse in 2008 which focused the executive’s minds on arranging capital raising to protect the struggling lender.
In statements presented to the SFO in lieu of answering questions in interviews, Thomas Kalaris, then CEO of Barclays Wealth Management, said that a bailout: “Would mean a restructuring of the bank; the shares would plummet and many people in the bank including senior management were at risk of redundancy. The senior management of the bank was extremely anxious to avoid being nationalized.”
The funding raised from Qatar to meet government imposed capital ratio requirements during this volatile period demonstrated that Barclays’ “status as a private company was riding on the vagaries of the market,” Kalaris said in the statement.
The trial at Southwark Crown Court is ongoing.
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