A high-profile fraud trial of four senior Barclays executives took the jury back to the frenzied days of the 2008 banking crisis this week with records of phone calls and emails between the defendants as the bank frantically sought to escape a taxpayer bailout.
The Serious Fraud Office claims that John Varley, then chief executive of Barclays, along with Roger Jenkins, Richard Boath and Tom Kalaris, who headed the bank’s wealth team, lied to the market and other investors about fees the bank paid to Qatar over the course of two emergency fundraisings worth more than £11bn.
It alleges the four men secretly paid £322m to Qatar in return for its investment in the capital raising, using two “advisory services agreements” to funnel extra money to the Qataris. The four men all deny wrongdoing in the trial at Southwark Crown Court.
In the record of an October 2008 telephone conversation shown to the jury, Mr Jenkins, former head of Barclays Middle East — nicknamed “big dog” by senior colleagues — described Bob Diamond, then head of its investment bank, as “f**king paranoid” about a possible Barclays nationalisation because he might be “let go” and said Mr Varley was “scared to death that the government turn up tomorrow morning”. Mr Diamond is not accused of wrongdoing.
In a further October 2008 phone call between Mr Jenkins, Mr Boath, a senior investment banker, and a third banker Jeff Weiss, Mr Jenkins said that he was awake 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 “the little people like us that are under the radar screen would be OK”.
Key quotes from the trial
The Barclays executive was noted to have said he was ‘panicking that we were about to get nationalised’ because the UK government ‘wouldn’t look kindly on compensation over a million dollars’
On Bob Diamond
Mr Jenkins had a conversation with fellow defendant Richard Boath in which Bob Diamond, then head of Barclays investment bank (and not accused of wrongdoing), was said to be ‘f**king paranoid’ about a nationalisation of Barclays
An email sent by Mr Jenkins said: ‘This capital did the trick why can’t [John] Varley [Bob] Diamond go to renco [remuneration committee] and say we need to make a special payment for this endeavour now’
The trial also heard that after Barclays agreed the Qatari fundraising, Mr Jenkins, who was paid £37.5m in 2007, pushed for an additional £25m special payment for his role in helping raise capital from Qatar saying he had helped “save our arses and jobs”.
In a November 2008 email to fellow Barclays Capital executive Rich Ricci, Mr Jenkins said: “This capital did the trick why can’t [John] Varley [Bob] Diamond go to renco [remuneration committee] and say we need to make a special payment for this endeavour now . . . Did it four times this year to save our arses and jobs guys you know the sell!”
The role of Qatar also came under the spotlight after Mr Justice Jay intervened to tell the jury on Thursday that if the prosecution case was correct, the Qatari entities must be as dishonest as the defendants.
Ed Brown QC, prosecuting for the SFO, has claimed to the trial that the two advisory services agreements were “spurious” and “a sham” to cover up the reality of paying the fees demanded by the Qataris, who are not on trial.
He has said the Gulf state had “knowingly entered into the mechanism” but it is not alleged by the SFO that the Qataris had entered into a criminal agreement with the defendants.
Mr Justice Jay told the jury that the SFO case rested on the assumption that the deals struck with Qatar at the same time as the two emergency fundraisings in 2008 were shams.
He has told the jurors that, to convict the men, they must be sure “as a starting point” that the advisory services agreements were shams and that no genuine services were provided — otherwise they must acquit.
The SFO has now finished its six-day prosecution opening and is calling witnesses.
Mr Varley and Mr Jenkins deny two counts each of fraud by false representation over the two fundraisings in June and October 2008. Mr Kalaris and Mr Boath deny one count each over the June fundraising. The trial, which may last up to six months, continues.
Get alerts on UK banks when a new story is published