Wednesday 19 June 2019

Barclays banker worried that multimillion-pound Qatar payments could be interpreted as 'bung', court hears

Senior Barclays executive Richard Boath
arrives at Southwark Crown Court Credit: Victoria Jones/PA Wire
Senior Barclays executive Richard Boath arrives at Southwark Crown Court Credit: Victoria Jones/PA Wire
Independent.ie Business Desk

Independent.ie Business Desk

A senior Barclays banker worried that multimillion-pound payments made to Qatar could be interpreted as a "bung", a court has heard.

Richard Boath, formerly head of Barclays Capital's European Financial Institutions Group, said lawyers had approved a financial "mechanism" connected to a capital-raising exercise in June 2008, a jury was told.

Boath, John Varley, ex-group chief executive at Barclays, and fellow former bankers Roger Jenkins and Thomas Kalaris are on trial at Southwark Crown Court charged with conspiracy to commit fraud.

They are accused of hiding £322m in commission fees, through a mechanism known as an advisory services agreement (Asa), paid to Qataris in return for billions in investment as the bank tried to keep its independent status during the economic crisis.

The jury has already heard that some of the money going to Qatar was intended for prime minister Sheikh Hamad - a scenario described as "a bit dodgy" by Boath and Jenkins.

Prosecutor Edward Brown QC read a summary of Boath's interviews with Serious Fraud Office (SFO) investigators to the court on Wednesday.

The court heard how Boath said "everybody knew", including his fellow defendants, that the Asas were mechanisms devised "to pay additional fees" to the Qataris for investing.

He claimed he was assured by lawyers that an agreement based on the provision of advisory services would be legal.

But Mr Brown told the court the advice given by lawyers "was based on a fundamentally untruthful presentation of the key facts" given to them by bank executives.

Barclays' legal team has not been accused of wrongdoing in the trial.

The court heard how Boath told SFO investigators he raised concerns about the details of an initial Asa with internal lawyer Judith Shepherd.

He said in a call at the time of the June 2008 capital raising: "My worry is every journalist just gets it and says this is, you know... well, I hate to use the phrase so I'm not going to use it... 'It begins with a B."

"Mr Boath said that the B word was probably 'bung'," Mr Brown told the jury.

"When asked what his understanding of the meaning of the word 'bung' was, Mr Boath said that it meant a corrupt payment."

The court earlier heard how Barclays executives created the Asas as a way to meet the Qataris' "tough" fee demands for investment.

Mr Brown told the court the alleged conspirators knew other investors would expect to be paid the same commission fees and these would have to be disclosed to shareholders and the wider market.

Boath told SFO investigators he had told Jenkins he "pushed back hard" on different "sets of economics" for different investors, the court was told.

He said other investors "would got nuts" if they found out that Barclays had done "a deal on the side or a sweetheart deal".

Closing the prosecution's opening arguments on Wednesday, Mr Brown alleged the payments through the Asas were the "answer to that problem" and were a "contrivance".

He alleged: "They were fees for making the investments, and part of Barclays' costs of the capital raisings.

"By presenting misleading and untrue representations to other investors and the public in general, those involved in devising the Asa 'mechanisms' engaged in conspiracies to commit fraud by false representation."

The Qataris, through the Qatar Investment Authority (QIA) and Qatar Holding, made investments in Barclays of approximately £1.9bn in June 2008 and £2.05bn in November 2008, the court has heard.

Varley, 62, of west London, Jenkins, 63, of Malibu, California, Boath, 60, of Henley-on-Thames, and Kalaris, 63, of south-west London, are charged with conspiracy to commit fraud by false representation in relation to Barclays' June 2008 capital raising.

Varley and Jenkins are charged with a second count of conspiracy to commit fraud by false representation in relation to Barclays' October 2008 capital raising.

Kalaris is a former chief executive of Barclays wealth management and Jenkins is a former executive chairman of investment banking and investment management in the Middle East and North Africa for Barclays Capital.

All four deny the charges against them.

The jury has heard that Christopher Lucas, formerly Barclays' group financial director, is named in the charges but is not fit to stand trial because he suffers from a "continuing illness".

The trial continues.

Press Association

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