Barclays bosses paid Qatar hundreds of millions of pounds in “secret” fees in order to secure billions of investment without which the British bank would be “basically dead”, a court was told on Thursday.
The first criminal trial investigating bank bosses’ behaviour during the 2008 financial crisis heard on Thursday that the gulf state’s sovereign wealth fund had Barclays “by the balls”, leading executives to pay £322m in “hidden” payments to Qatar.
During the financial crisis, when Northern Rock was nationalised and RBS and Lloyds were bailed out, Barclays bosses were desperate to secure investment from the “enormous wealth” of Qatar in order to avoid a bailout, Ed Brown QC, prosecuting on behalf of the Serious Fraud Office, said.
But Southwark crown court heard on Thursday that the Qataris, including the then prime minister Sheikh Hamad bin Jassim bin Jaber al-Thani, knew Barclays was desperate for cash and were “playing hardball”.
Richard Boath, one of four Barclays executives standing trial on accusations of fraud and conspiracy, told his boss on 28 May 2008 that: “Without £1bn, at the very least, from Q [Qatar] we are basically dead,” the jury was told.
Brown alleges that four Barclays executives, including former chief executive John Varley, conspired together to pay Qatar extra secret fees in return for investment of nearly £12bn.
The court heard that Varley said knowing that Qatar was interested “made my day”.
Varley told Bob Diamond, who was then chief executive of investment banking division Barclays Capital, that: “Made my day. Know [sic] we have to get it over the line, but it’s a great starting point for the conversation.”
Brown alleged that the Barclays executives came up with a plan to pay Qatar – which they referred to with the codename Quail – much greater fees in return for their investment than was offered to other potential investors.
In June 2008 Varley emailed Barclays then chairman Marcus Agius: “Quail is bagged at 2bn of the conditional. Very helpful underpin. Took longer than I had hoped, but these people are the new cocks of the roost.”
The former Barclays executives – Varley, Boath, Jenkins and Tom Kalaris, who was boss of Barclays’ wealth management division – are charged with conspiring to commit fraud by making false representations. Varley and Jenkins face an additional charge related to a second round of fundraising. All four men have pleaded not guilty.
The trial at Southwark crown court in central London continues.