A Barclays executive received a £25m bonus after securing Qatari investment in the bank under what amounted to a “sham agreement” at the height of the 2008 financial crisis, a court has heard.
A jury at Southwark crown court was told on Tuesday that executives pursued the capital-raising deal in order to safeguard Barclays’ independence and avoid an “extremely unattractive” government bailout that would have restricted the bank’s operations, threatened top jobs and put management pay packages under extra scrutiny.
However, Ed Brown QC, prosecuting on behalf of the Serious Fraud Office (SFO), said the former head of Barclays Capital, Roger Jenkins, “could not care less” about the bank’s independence and ultimately revealed “a different motivation” for pushing the deal through – namely a hefty bonus.
Jenkins, known to his colleagues as “big dog”, had taken home £39.5m the previous year, according to the prosecution.
In an email sent on 24 November 2008, Jenkins questioned why the bank’s bosses, including the then chief executive, John Varley, were not pushing the pay-setting remuneration committee to say “we need to make a special payment for this endeavour now”.
“It was not his job no one else in the organization or at any other bank except credit suisse did this [sic],” Jenkins wrote in the email. “Did it four times this year to save our arses and jobs guys you know the sell! If not what is the plan.”
His colleague Rich Ricci replied in an email: “Still the plan, Remco [remuneration committee] is Dec 9.”
Brown said Jenkins also pushed for a bonus earlier that month, “but the feeling was that diplomatically any decision in respect of a bonus should wait” until after a shareholder vote on the Qatari deal, “for obvious reasons”.
Four months later, in March 2009, Jenkins was set to reap his reward. “Following a period of negotiation, a draft agreement with Jenkins records that he was to be paid £25m in a ‘special award’ for his role in the capital raising,” Brown told the jury.
But the SFO’s lead prosecutor cast the deal with Qatar as a “sham”, saying that advisory service agreements – under which Barclays was to make payments to Qatar on the basis that Qatar would provide certain services to the bank in return – were inflated to “disguise” and “cover up the reality” of Qatar’s demand for higher commission payments in exchange for investing.
Those fees started as £125m, grew to £280m and were not properly disclosed to the stock market, Brown claimed.
He said Barclays, as a publicly listed UK bank, was bound by regulatory and legal requirements to publicly disclose the terms of its agreements.
The SFO alleges that four former Barclays executives – Varley, Jenkins, Richard Boath and Tom Kalaris – lied to the stock market and other investors about the fees the bank paid to Qatar in relation to emergency fundraising of more than £11bn.
All four men deny the charges. Qatar is not accused of wrongdoing. The trial continues.