One of Barclays’ top executives was awake and panicking at 2am during the height of the financial crisis over fears that a government bailout would compromise his bonus, a court heard yesterday.
Roger Jenkins, Barclays’ investment head for the Middle East and north Africa, told senior bank staff “I was panicking that we were about to get nationalised”, adding that the government “wouldn’t look kindly on compensation over a million dollars”.
Jenkins is one of four former executives at the bank on trial over allegations that they committed fraud by disguising extra payments made to secure a crucial bailout from Qatar during the crash a decade ago.
The Serious Fraud Office (SFO) alleges that former chief executive John Varley, wealth management boss Tom Kalaris, European financial institutions group head Richard Boath and Jenkins used “sham” advisory service agreements (ASAs) to disguise an inflated fee paid to senior figures in Doha in exchange for a multi-billion pound investment.
The SFO says the Qataris requested a 3.75 per cent fee for their investment – far above the standard 1.5 per cent commission which was offered to other investors. The prosecution claims the bank eventually settled on a fee of 3.25 per cent, with the extra 1.75 per cent provided through two ASAs.
Varley and Jenkins face two charges of conspiracy to commit fraud through the use of both ASAs that were struck with the Qataris during 2008, while Kalaris and Boath face a single charge, relating to the first ASA. All four have pleaded not guilty, and claim the ASAs were “genuine”.
In his opening remarks, which began last week, SFO prosecutor Ed Brown claimed the Barclays bosses were desperate to avoid a bailout.
Yesterday, Brown described how in October 2008 Jenkins spoke to Boath and another senior banker, Jess Weiss, about the risks of their bonuses being revealed.
The jury heard that Jenkins was paid £39m in 2007, and was recommended for a £25m payment for his role in the capital raisings; Boath was paid £2.87m in 2007, and £1.87m in 2008; Varley was paid £4.23m in 2007 and £1.1m in 2008; and Kalaris was paid £13m in 2007 and £7.7m in 2008.
“You may think that some of these men were highly motivated to keep their jobs,” Brown told the jury.
The jury at Southwark Crown Court was presented with another recording of Jenkins, in which he described how Varley and then-Barclays’ president Bob Diamond were reacting to the potential for a government takeover.
“John is scared to death that the government turn up tomorrow morning,” Jenkins told Boath in a recording. “And Bob is f***ing paranoid.”
In phone recordings from July that year, described by Brown, Jenkins told Boath he was preparing to meet Sheikh Hamad bin Jassim bin Jaber al-Thani, then Prime Minister of Qatar, to tell him that share uptake had been low during the bank’s pivotal capital raising – meaning the Qataris would end up with more shares, and a lower rate of return.
Boath described the situation as a “nightmare”, saying “we’re f***ed.”
“I’m going to eat humble pie and kiss arse tomorrow,” Jenkins later told Boath, whose phone calls were recorded because he was a trader.
Brown told the jury Jenkins flew to the south of France to meet with Sheikh Hamad the next day.
The trial continues.