friday, 28 february of 2020

Fraud

London jury clears three former Barclays bankers of fraud charges: UK

The UK Serious Fraud Office has lost its high-profile seven-year case against Barclays bankers over deals they made with Qatar during the financial crisis after three former top executives were all cleared of fraud charges by a jury.

The three defendants — Roger Jenkins, Tom Kalaris and Richard Boath — were acquitted after a five-month retrial at London’s Old Bailey. It was the first criminal trial to examine steps senior bankers took during the financial crisis in the UK.

The jury took just over five hours to acquit Mr Jenkins, who managed Barclays’ relationship with Qatar and the Gulf state’s prime minister, Mr Kalaris, the American head of the bank’s wealth unit in 2008, and Mr Boath, its investment banking unit’s European co-head of financial institutions. The SFO had alleged the three had lied to the market in official documents detailing two emergency cash calls in 2008, which helped the bank avoid a taxpayer bailout by raising £11.2bn. The men denied wrongdoing.

They stood in the dock with their heads bowed as the jury foreman read out the verdicts. They exchanged glances and smiled after the verdicts were delivered.

Their acquittals follow that of John Varley, Barclays’ chief executive in 2008, who was cleared by a judge during an earlier trial last year, after he ruled that the SFO failed to produce sufficient evidence against him. Fraud charges against Barclays as a corporate defendant were scrubbed even before trial.

The verdicts deal a crushing blow to the SFO, which has spent about £15m on its flagship prosecution, even before legal fees from two five-month trials and numerous pre-trial hearings are taken into account.

Mr Varley was the world’s first chief executive of a major bank to face a jury trial over steps taken during the financial crisis.

In a retrial of the remaining trio, the SFO did not call any live witnesses, relying on email trails and taped phone calls from the defendants.

The failure to achieve any convictions will reignite criticism about the SFO’s ability to prosecute complex fraud at the highest levels, as well as a broader debate on whether the current UK’s complex fraud laws — particularly around corporate criminal liability — are fit for purpose.

The SFO’s director Lisa Osofsky last year dropped two high-profile probes into Rolls-Royce and GlaxoSmithKline, and faces mounting pressure over the SFO’s falling conviction rate — of just 53 per cent of defendants in 2018-19 — a three-year low.

The fraud agency alleged the Barclays defendants had funnelled secret fees of £322m to Qatar and its powerful prime minister at the time, Sheikh Hamad bin Jassim bin Jaber al-Thani, in exchange for their investment across two fundraisings in June and October 2008.

The fraud charges — carrying a 10-year-maximum sentence — against the men turned on a so-called advisory services agreement, or ASA, signed with Qatar at the same time as the June fundraising, and extended in October. The original ASA, signed by Mr Varley, was just six paragraphs long and had the amount handwritten.

The SFO alleged that the ASA was a dishonest mechanism to pay the hard-bargaining Qataris the outsize fees they demanded for investing.

However, the defendants maintained the side deals were genuine, signed off by lawyers, and designed to help expand Barclays’ Middle Eastern business and get valuable banking business from gas-rich Qatar.

The trial lifted the lid on the febrile atmosphere as markets roiled in 2008 and Barclays did everything possible to avoid government control.

The SFO attempted to use sometimes-lurid conversations among the three — heard to speak about not wanting to go to jail or "get rumbled" — as evidence that the men knew what they were doing was wrong.

In one call, Mr Kalaris, dubbed the "quarterback" to get the capital raisings over the line, told Mr Boath: "None of us wants to go to jail here . . . The food sucks and the sex is worse."
(Published by Financial Times, February 28, 2020)
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