6 International Financing Review February 29 2020Top news
Barclays, Quail and the trial over
the 2008 Qatar deal
People & Markets Three former Barclays executives acquitted at London courtBY STEVE SLATERWhen 11 members of the jury
got stuck in an elevator between
mOORSûATû,ONDONSûFAMOUSû/LDû
Bailey courthouse last week it
was an ominous sign for
prosecutors in the trial of former
BARCLAYS bankers over a
fundraising 12 years ago: the
case appeared stuck.
And so it proved on Friday.
The three former Barclays
executives were acquitted of
fraud related to the British
bank’s £4bn fundraising with
Qatar investors in 2008.
The three defendants – Roger
Jenkins, Tom Kalaris and Richard
Boath – were cleared by a jury
AFTERûLESSûTHANûlVEûHOURSûOFû
deliberations.
The court case had lasted more
than four months, so it was an
abrupt end to the trial of the
most senior bankers put on trial
in Britain for events that took
PLACEûDURINGûTHEûlNANCIALûCRISIS
“It’s been a long time. I always
said I had legal advice
throughout,” Jenkins told IFR
after the decision outside the
court. “I’m looking forward to
getting back to continuing my
career.”
He later said in a statement
that he always knew he did
nothing wrong in 2008 and had
“lived under a cloud” over his
private and business life since
the investigations began eight
years ago.
Jenkins was head of Middle
East at Barclays’ investment
bank at the time of the
fundraising and was the
gatekeeper for the relationship
with Qatar; Kalaris was CEO of
Barclays’ wealth management;
and Boath was capital head of
THEû%UROPEANûlNANCIALSûGROUP
Boath said he was “delighted
and relieved” with the verdict.
“The SFO case was an
invention and should never have
been brought,” Boath said,
adding that he had been clearedBYû"RITAINSûlNANCIALûREGULATORû
in July 2017.
"RITAINSû3ERIOUSû&RAUDû/FlCEû
accused the three men of
arranging for Barclays to pay
£322m in secret fees to Qatar as
part of its investment in the
bank. It said former Barclays
lNANCEûDIRECTORû#HRISû,UCASû
would also have been charged,
but he was too ill to stand trial.
At the heart of the case were
two advisory service
agreements, or ASAs, signed
between Barclays and Qatari
investors in June and October- They were agreed
alongside investments by Qatar
in the bank’s fundraisings.
“There were no real services
provided as a result of the
agreements,” said Edward
Brown, leading counsel for the
prosecution.
But the defendants’ lawyers
said they were genuine
agreements to help win lucrative
business for Barclays. The bank
wanted to win business from
rich potential Middle East clients
from rivals including Credit
Suisse and Goldman Sachs.
“They [Qatari investors] had
extraordinary amounts of
wealth,” John Kelsey-Fry, lawyer
for Jenkins, said at the trial.
“They wanted to invest
billions and billion of pounds.
That investment required banks.
So they were going to spend a lot
of money for a long time, from
which the banks involved could
REALISEûSIGNIlCANTûPROlTv
Kelsey-Fry said Credit Suisse
had been the Qataris’ preferred
bank for the previous 20 years.
Goldman Sachs had also done
deals there. Barclays wanted
some of that action.
In October 2008, for example,
Qatar offered to Barclays an
US$8bn oil and gas hedging
contract called “Tinbac” that it
had previously arranged
through Goldman. That could
have been worth US$250m in
fees, Kelsey-Fry said.
Jenkins said in court that 12 or
13 “opportunities” arose for
Barclays in the months following
THEûlRSTû!3!
“I’m quite certain I explained
the concept – we are going to be
in a preferred position and we
are going to get value for money
and it could come in many
different forms,” Jenkins said in
court. “Services is the wrong
word – it was opportunities.”
The second ASA signed in
October 2008 was little more
than one page, but it outlined
several areas where Barclays
INTENDEDûTOûBENElT ûINCLUDINGû
developing business in the
Middle East, introducing
potential investors, expanding
in commodities, getting referrals
in the oil and gas industry, and
opportunities in infrastructure
ADVISORYûANDûlNANCING
“The ASA was not a sham,” Ian
Winter, lawyer for Tom Kalaris,
said in court. “It is abundantly
clear that the lawyers were not
only OK with the use of the ASA
to provide value, but were
instrumental in its
implementation, and
consistently advised the
defendants that it was a lawful
way to proceed.”HOW THE DEAL WAS DONE
Details relayed in court showed
a lengthy courtship between
Barclays and several potential
INVESTORSûASûGLOBALûlNANCIALû
markets unravelled and banks
SCRAMBLEDûTOûlNDûINVESTMENTû
from wealthy backers.
Barclays adopted a bird theme
to refer to its potential investors,
as shown by codenames used in
conversations and documents
seen in court. Barclays was
“Raven”, Qatar was “Quail” and
the June 2008 fundraising was
“Project Heron”.
The other banks investing in
the cashcalls were “Crane”,
“Penguin” and “Bluebird”.
Jenkins, who was known as
“Big Dog” at the bank, told the
COURTûHEûlRSTûMETû1ATARSûFORMERû
prime minister Sheikh Hamad
bin Jassim bin Jaber al-Thani in
July 2007 in Sardinia.
He said the two men had
dinner on a boat on the Italian
island and met subsequently on
the French Riviera at Cannes, in
Los Angeles, Doha and Jenkins’
apartment in London to discuss
business deals in retail, real
estate and banks as their
relationship developed.
"UTûASûlNANCIALûMARKETSû
worsened in 2008, Barclays’ need
FORûOUTSIDEûINVESTORSûINTENSIlEDû
Indeed, the court heard that in
June 2008 Boath said if Qatar
didn’t come up with the money
then Barclays was “fucked”.
The prosecution said the
Qataris knew they were in a
strong position and “drove a
very hard bargain” to agree to
invest, and wanted to be paid a
3.75% commission for a £2bn
investment in June 2008,
compared with the 1.5% Barclays
was paying other investors for
underwriting.
The prosecution said Barclays
agreed to pay Qatar 3.25%, but
the bank could not disclose that
to other investors so bankers
SCRAMBLEDûTOûlNDûAûWAYûTOû
Source: Refinitiv structure it.01002003004005006007008002006 2010 2014 2018PenceCOLLAPSE IN BARCLAYS SHARES
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