14/01/2019 Southwark Crown Court, London Barclays fraud case. Picture shows former CEO of Barclays, John Varley.
Prosecutors allege that John Varley, former chief executive, along with three others lied to the market and other investors about the bank’s fees to Qatar over the course of two emergency capital calls worth more than £11bn © Charlie Bibby/FT

John Varley, former chief executive of Barclays, was “scared to death” about a potential nationalisation of the bank during the 2008 financial crisis, which also made his colleague Bob Diamond “paranoid”, a court has heard.

A criminal trial of Mr Varley and three of his former colleagues was shown details of a phone conversation between two of the accused in October 2008 when the UK government announced a bank bailout plan — triggering fears among Barclays’ executives about their multimillion-pound bonuses and careers.

On the call Roger Jenkins, Barclays’ former head of the Middle East, described Mr Diamond, then head of its investment bank, as “f**king paranoid” and said Mr Varley was “scared to death that the government turn up tomorrow morning”.

Richard Boath, a senior investment banker, asked Mr Jenkins: “So Bob is paranoid about being nationalised?” Mr Jenkins replied: “Well, and let go.” Mr Boath replied: “Oh, personally?” to which Mr Jenkins replied “yes”.

Prosecutors allege that Mr Varley along with Mr Jenkins, Mr Boath and Tom Kalaris, who headed the bank’s wealth team, lied to the market and other investors about the bank’s fees to Qatar over the course of two emergency capital calls worth more than £11bn. Mr Diamond has not been charged with any wrongdoing.

The UK’s Serious Fraud Office claims the four men secretly paid £322m to Qatar in return for its investment in two capital calls, which allowed Barclays to escape a UK government bailout in 2008.

The SFO says that “advisory services agreements”, or ASAs, struck with Qatar at the time were just “dishonest mechanisms” to funnel extra money to the Gulf state. The four men deny wrongdoing.

On Monday the trial was shown minutes from an October 2008 Barclays board meeting in which the directors stated a “clear preference” that Barclays would not take UK taxpayer capital as doing so would constrain the flexibility of the bank, future dividends and executive bonuses.

Details of a further phone call was shown to the jury between Mr Jenkins, Mr Boath and a third banker Jeff Weiss in early October 2008. In it Mr Jenkins says that he woke at 2am “panicking that we were about to get nationalised” because the UK government “wouldn’t look kindly on compensation over a million dollars”.

Mr Weiss told the men he was not panicked but “just figured they’d take Varley and Diamond’s compensation down to a reasonable amount” but “little people like us that are under the radar screen would be OK”.

Mr Jenkins, who earned £39.5m in 2007 and was recommended for a £25m payment for his role in the Qatar capital raisings, tells the two men “if we don’t have to go to the [UK] government we don’t have to disclose your, yours and Jeff’s comps because mine’s nothing”.

Ed Brown QC, prosecuting, told the jury that Mr Varley was paid £4.23m in 2007, Mr Boath received £2.87m and Mr Kalaris received £13m. “You may think that some defendants were highly motivated to keep their jobs,” he told the jury.

Earlier the trial heard a July 2008 phone call between Richard Boath and Barclays’ in-house lawyer Judith Shepherd about the first ASA agreement in June 2008, in which he said “when I put that on my screen. and I read it I sort of start to tremble”.

Mr Brown claimed to the jury that Mr Boath’s “anxiety” about the ASA showed he “knew it was wrong and continued to worry about it”.

Mr Varley and Mr Jenkins deny two counts each of fraud by false representation over two Barclays’ fundraisings, which took place in June and October of 2008. Mr Kalaris and Mr Boath deny one count each over the June fundraising.

The trial, which may last up to six months, continues.

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