Wednesday, 14 June 2017

Barclays braced for outcome of five-year SFO fundraising probe

Barclays will learn within days the outcome of a five-year Serious Fraud Office (SFO) probe into aspects of the £11bn share sales during the financial crisis which enabled it to remain free from Government ownership.
Sky News has learnt that expectations have grown among a number of current and former Barclays executives that the SFO plans to charge both the bank and several individuals in connection with the inquiry, which has focused on arrangements struck with a Qatari sovereign wealth fund in 2008.

People close to the situation said that charging decisions could be announced by the SFO as early as the next two days, although there was an outside chance that they could slip into next week.

David Green, the SFO director, told a conference in Paris this week that "very significant" charging decisions would become public shortly.

The culmination of this phase of its Barclays probe, which was launched in 2008, follows two earlier self-imposed deadlines this year that the SFO missed.

It has become one of the most important investigations ever undertaken by the SFO, and among the most significant to be conducted into events in the banking sector during the financial meltdown which engulfed the City nearly a decade ago.

The agency's inquiry centred on commercial arrangements struck between the bank and Qatar Holding, which bought shares in Barclays during two fundraisings in June and October 2008.

The City regulator is also continuing to investigate Barclays over disclosures relating to agreements between the bank and Qatar Holding, having previously indicated that it would impose a £50m penalty.

During the last two years, the SFO has held periodic conversations with lawyers acting for Barclays about a deferred prosecution agreement (DPA), which would involve the bank or a subsidiary paying a substantial penalty and admitting to certain failings.

Tesco and Rolls Royce Holdings have both signed DPAs with the SFO this year.

It is unclear, however, whether a DPA remains a realistic prospect for Barclays, with charging decisions now imminent in the SFO's inquiry.
The SFO has also been investigating a number of former Barclays executives, including John Varley and Chris Lucas, respectively the chief executive and finance director at the time of the capital-raisings from Qatari investors in June and October 2008.

They were interviewed under caution, along with Roger Jenkins, the dealmaker who put together the fundraising deals, and Bob Diamond, who later went on to become the bank's chief executive before resigning in the wake of the Libor scandal in 2012.

A number of Barclays' in-house lawyers have also been under investigation by the SFO.

Barclays' successful attempts to raise capital from private investors contrasted with rivals such as Lloyds Banking Group and Royal Bank of Scotland, which were forced to rely on taxpayer bail-outs.

Barclays subsequently argued that its avoidance of direct state support should enable it to remain free from the restrictions on remuneration and dividends which applied to its Government-backed competitors.

Charging decisions in the Barclays case will be watched especially closely in Westminster, given Theresa May's pledge in the Conservative manifesto to abolish the SFO and fold it into the National Crime Agency.

Barclays is also facing a civil lawsuit over its 2008 fundraisings from PCP Capital Partners, a private investment firm, which is suing the bank for hundreds of millions of pounds in fees it says it should have been paid.

PCP has alleged that Barclays lent its new Qatari investors billions of pounds to fund the purchase of the bank's shares - which, if true, would constitute an illegal process known as financial assistance.

SKY      News.