A Barclays executive was warned over deploying advisory services agreements like the one used to satisfy Qatar’s requests for fees in 2008, a court has heard.
Prosecutors for the Serious Fraud Office played recordings and read excerpts of an interview with the ex-head of Barclays’ European financial institutions, Richard Boath, conducted by its investigators in 2014.
Boath recalled fellow defendant Roger Jenkins asking him to “find a mechanism” or “some deal structure” that would allow the bank to pay Qatar additional fees as part of their involvement in a capital-raising in June 2008. Boath said he came to learn about advisory services agreements from a Barclays colleague named Mauro Mariani, who was cautious about their use.
“He said, they’re quite difficult. Be careful with them and be sure if you’re receiving fees, you’re giving value … you’re getting what you’re saying you’re getting in exchange,” Boath said in the taped interviews.
The Serious Fraud Office alleges that four former Barclays executives – Boath, Jenkins, John Varley and Tom Kalaris – lied to the stock market and other investors about how £322m in fees were paid to Qatar in exchange for the Gulf state’s participation in an emergency fundraising of more than £11bn in 2008.
Prosecutors say the executives put together two advisory services agreements in order to disguise Qatar’s demand for larger commission payments.
All four men have denied the charges.
“There wouldn’t have been an advisory services agreement” if it wasn’t for Qatar’s request for a larger discount on their investment, Boath explained in the interviews. “It was a mechanism to pay them additional fees,” he added.
Boath repeatedly said in his 2014 interview that he was uncomfortable with the arrangement from the start, as it could be seen as Barclays giving higher fees to one investor and not others. He recalled thinking: “If they found out, they’ll go completely nuts, you can’t do that.”
At one point in the transcript, Boath said he thought Barclays should have told the prospective Gulf investor to “get stuffed,” according to the SFO interview.
The jury also heard Boath say that Qatar’s motivation for entering into a side deal with Barclays in 2008 was to buy shares on the cheap during the financial crisis, rather than forge a strategic relationship with the lender.
He said: “Their primary motivation was ‘this bank needs money … the world is going to hell in a hand basket, we can get it cheap, their shares have halved in the last year. We’re going to get a 10% discount, we want as big a fee as we can.’”
But the bank eventually “satisfied itself that it was going to get value for those services”, he explained.
Boath said he became less anxious over the deal after receiving emails suggesting there had been oversight by senior Barclays executives and the bank’s legal team. “The decision is it’s legal … there’s a decision on disclosure, and there’s an agreement on the amount of fees … I am very, very relieved.”
The trial continues.