The Serious Fraud Office's Barclays probe: Everything you need to know

 
William Turvill
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The SFO has decided to charge Barclays and four former directors with fraud (Source: Getty)

What happened in 2008?

In the summer of 2008, at the height of the global financial crisis, Barclays needed emergency funding. The bank raised £4.5bn in June that year and £7.3bn in October from investors including Qatar Holding and Challenger Universal.

Why was this investigated?

Over the last five years, the Serious Fraud Office (SFO) has been investigating “advisory services agreements (ASA)” that were struck with Qatari investors in 2008, which resulted in payments of £322m to them. Barclays did not fully disclose the details of these ASAs.

Barclays then loaned the State of Qatar $3bn in November 2008. It is unlawful, under the Companies Act 1985, for banks to lend money to themselves.

Why did Barclays turn to Qatar?

By getting investment from Qatar, Barclays was able to avoid being bailed out by the UK government, like its peers Lloyds and Royal Bank of Scotland, which were both nationalised.

Read more: SFO charges four former Barclays bankers including ex-CEO John Varley

What charges are execs facing?

Barclays, its former chief executive John Varley, and executives Roger Jenkins, Thomas Kalaris and Richard Boath are charged with conspiracy to commit fraud by false representation in relation to a June 2008 capital raising.

In addition, Barclays, Varley and Jenkins are then accused of conspiracy to commit fraud by false representation in relation to an October 2008 capital raising. These three defendants are also charged with unlawful financial assistance.

What have they said?

Barclays has said it is “considering its position in relation to these developments” and awaiting “further details of the charges from the SFO”.

Jenkins’ lawyer has said he “intends to vigorously defend himself against these charges”, adding: “As one might expect in the challenging circumstances of 2008, Jenkins sought and received both internal and external legal advice on all of the matters covered by the accusations levelled today by the SFO.”

Boath issued a statement saying: “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. The evidence I have supplied is very clear: there is no case for me to answer.”

Read more: Serious Fraud Office set to announce whether Barclays faces Qatar charges

What jail time could the charged execs be facing?

Michael Potts, managing partner of Byrne and Partners, said the maximum sentence for conspiracy to commit fraud by false representation is 10 years, while the maximum for unlawful financial assistance is two years.

He added: “Given that the individual defendants would be in a breach of trust scenario they would be looking at the higher end of sentencing for the fraud offences.

“A person who is in a leading role with a high level of culpability and a high level of harm would be looking at a five to eight year range under the sentencing guidelines before any mitigation.

“In terms of the unlawful financial assistance, I think this would be at the top end so very close if not the maximum of two years.”

How much could Barclays be fined?

Raj Chada, criminal defence solicitor at London law firm Hodge Jones and Allen, said: “Any fine for Barclays could be in the hundreds of millions.”

Could it lead to a civil action?

Yes, according to City law firm RPC, which announced this morning that it was “actively reviewing the prospects” of making a civil claim over documents published to shareholders in June and October 2008.

Read more: S&P has become the first ratings agency to downgrade Qatar

And what about Amanda Staveley?

Barclays is facing legal action from Staveley, who is suing the bank for £700m in advisory fees that she claims her firm, PCP Partners, is owed in relation to the 2008 fundraising.

What happens next?

The defendants are due to appear before Westminster Magistrates’ Court at 2pm on 3 July.

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