FOREIGN INVESTMENT / FRAUD – Dismissal of a Historic Fraud Case against four Barclay Executives
April 08, 2019
Earlier today, Justice Robert Jay discharged a jury at Southwark Crown Court in a historic fraud case against four former Barclays’ executives. Barclays plc is a British multinational investment bank and financial services company. Prior to today’s dismissal, Barclays’ former executives, including chief executive John Varley, and his former colleagues: Richard Booth, Tom Kalaris and Roger Jenkins, were in trial since January 2019 facing charges of conspiracy to commit fraud by false representation.
Specifically the charges arose after Barclay rejected British government funds (a.k.a “government bailout money”) back in 2008. Barclay rejected government bailout funds, to avoid greater government control, regulation and scrutiny, opting to raise private capital as an “emergency fundraiser”. Barclay bank raised approximately $15.4 billion (USD) from Middle East investors, primarily from the Gulf. One of the biggest investors was Qatar Holding, a subsidiary of Qatar’s sovereign wealth fund, whom injected $7.8 billion (USD) in cash. UK Serious Fraud Office (SFO), which prosecutes white-collar crimes, alleged that the four executives used side deals, made false representations and otherwise used fraudulent tactics to induce Qataris to invest in Barclay.
Specifically Barclay had a legal obligation to disclose such fundraising efforts to investors and the wider market; the bank fraudulently and intentionally failed to do so. Such disclosures are published in a public document known as a “prospectus”. Prospectus is a legal document that describes a security and helps investors make a more informed investment decision and ensures transparency for current investors, prospective investors and the wider market. These public filings must contain the truth and not fraudulently mislead the public. Barclay’s prospectus disclosed that it was paying a commission fee to the Qataris and failed to disclose that other investors were not being paid these same commissions. Moreover investigations revealed that Barclay was hiding commission fees in ‘Advisory Service Agreements’ which were falsely and fraudulently claiming that the Qataris were providing ‘advisory services’ in return for multi-million pound fees. In other words, it was alleged that Barclay hid the true commission fees paid to the Qataris in fraudulent service agreements. The prosecutors’ position in this case was that Barclay failed to divulge this information to the public because other investors would have demanded to be paid the same commission, Barclay wanted to induce Qatari investment and public confidence in the bank would collapse.
Prior to today’s discharge, a jury was asked to consider and conclude whether the four executive conspired together to commit fraud by making false representations, namely in the documents relating to Barclay’s emergency fundraising efforts back in 2008. The reason for the halt in the trial has not been reported to the media.
Below is a link two articles published by the Guardian and BBC News, respectively, addressing the Crown Court’s dismissal earlier today:
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