LONDON--Barclays and four former top executives were charged with fraud on Tuesday over undisclosed payments to Qatari investors as part of a 12 billion pound ($15 billion) emergency fundraising during the financial crisis in 2008.
Britain's Serious Fraud Office (SFO) charged Barclays Plc, former chief executive John Varley, Roger Jenkins, Tom Kalaris and Richard Boath with conspiracy to commit fraud and unlawful financial assistance in its first criminal prosecution of a bank and senior managers over events during the credit crisis.
Barclays said it was considering its position and awaiting further information about the charges, which follow a five-year inquiry into how it avoided the fate of Lloyds and RBS by averting a state bailout.
The SFO charged Varley, Jenkins, the ex-chairman of its Middle East investment banking arm, Kalaris, a former CEO of the bank's wealth division and Boath, a former European head of financial institutions, after investigating a two-part fundraising that included a $3 billion loan to Qatar. That loan, paid to Qatar in November 2008, could have broken the law if the SFO can show it was connected with the Qatari payments to Barclays. Public companies are normally prohibited in the UK from lending money for the purchase of their own shares, a process known as financial assistance.
A lawyer for Jenkins said he would "vigorously defend" himself, adding his client had received both internal and external legal advice at the time.
Boath said he had no case to answer as he had repeatedly raised concerns about decisions taken by the bank at the time with both senior management and senior lawyers and had been reassured the decisions were lawful. "The SFO's decision to charge me is based on a false understanding of my role and the facts. I was not a decision-maker and had no control over what the bank did in 2008," he said in a statement. "The evidence I have supplied is very clear: there is no case for me to answer."
A lawyer representing Varley, who resigned as a Rio Tinto senior independent director with immediate effect following the SFO charges, declined to comment. A lawyer for Kalaris declined to comment.
Each offence of fraud by false representation carries a maximum jail sentence of 10 years. Barclays faces a fine.
The men have been told to appear before Westminster Magistrates' Court on July 3.
The case centres on agreements between Barclays and Qatari investors during two fundraisings in June and October 2008. Qatar Holding, part of the Qatar Investment Authority sovereign wealth fund, and Challenger, an investment vehicle of former Qatari prime minister Sheikh Hamad bin Jassim bin Jabr al-Thani, invested around 5.3 billion pounds in Barclays.
Authorities have examined whether payments from Barclays to Qatar at the same time, such as around 322 million pounds in "advisory services agreements" (ASA), alongside the $3 billion loan, were honest and properly disclosed.
