Former Barclays chief executive John Varley has denied to the High Court that he “deceived” the bank’s board over two £322m side deals struck with Qatar during the lender’s £7.3bn cash call in 2008 that staved off UK government control.
Mr Varley, who was head of Barclays during the financial crisis of 2008, is giving evidence in a trial where the bank is being sued for £1.5bn by PCP, the firm founded by financier Amanda Staveley. Ms Staveley, who was leading a parallel investment by Abu Dhabi, says she never would have invested if she knew Qatar was getting better terms. Barclays denies wrongdoing.
Mr Varley was cross examined on Monday about what the Barclays board knew about two advisory services agreements (ASAs) worth £322m, which Barclays signed with the Gulf state as it tapped the Qataris for £4bn in two fundraisings in June and October 2008. The bank says the side deals with Qatar were intended to extend its Middle Eastern business but PCP contends that the two ASAs were “shams”.
In his evidence Mr Varley denied the ASAs were a “sham” or “disguised commission” and said: “If I’d misled the board I would have been out of a job within five minutes.”
He told Joe Smouha QC, barrister for PCP: “If you are suggesting to me — as I think you are — that I in some way deceived the board, then I strongly disagree with that.”
Mr Varley said that the bank’s board finance committee had seen a draft of the first ASA with Qatar on June 19 2008. He said it was “highly improbable” he would not have been asked about it by the board — even though there is little reference to it in the board minutes.
“I think entering into an agreement with a sovereign wealth fund is not a thing that happens every year and I think I would have been asked: ‘tell us about this’,” Mr Varley said.
“I think the board did understand alongside the subscription [agreement] there was a concurrent and connected agreement,” he added.
Mr Varley, who was cleared of criminal charges last year relating to the 2008 fundraising, has insisted in his evidence that the ASAs were not “legally connected” to the Qatari cash calls but were “commercially connected”.
He called the June ASA a “binding document” and said its “simplicity” was “convenient to the immaturity of the relationship” with Qatar. He said the side agreement with Qatar opened doors in countries like Saudi Arabia which had historically been “closed” to the bank. This meant Barclays paying Qatar £42m for the first advisory services agreement was “a worthwhile economic bet”, he said.
The case continues.
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