Ex Barclays finance chief would have faced charges, trial hears

Fraud trial concerns undisclosed payments made to Qatar as Barclays struggled during 2008 financial crisis.

     Three former top Barclays executives are on trial for conspiring to commit fraud during the 2008 financial crisis - charges that they deny [File: Stefan Wermuth/Reuters]
    Three former top Barclays executives are on trial for conspiring to commit fraud during the 2008 financial crisis - charges that they deny [File: Stefan Wermuth/Reuters]

    Former Barclays finance director Chris Lucas would have been criminally charged over two emergency fundraisings launched by the bank at the height of the 2008 global financial crisis if he were not too ill to stand trial, a London fraud trial heard on Wednesday.

    As a former bank director, Lucas, who stepped down in 2013 due to his health, arguably took direct responsibility for false representations in the bank's public documents about capital raisings in June and October 2008, a prosecutor for the United Kingdom's Serious Fraud Office (SFO) alleged.

    The high-profile trial revolves around undisclosed payments to Qatar as Barclays raised more than 11 billion pounds ($13.4bn) from the Gulf state and other investors to avert a state bailout as markets roiled in the global credit crisis.

    Qatar, a major investor in Britain, has not been accused of wrongdoing.

    On the second day of the fraud trial of three former top Barclays executives -  Roger Jenkins, Tom Kalaris and Richard Boath - at London's Old Bailey criminal court, Prosecutor Edward Brown highlighted the alleged role played by Lucas.

    "The prosecution say ... that Chris Lucas may be regarded as directly making a false representation in the Barclays documents [as a director]," Brown said, as the prosecution laid out its case.

    "He [Lucas] is not a defendant, before the court, due to illness ... But for his illness, he would have been charged.",

    Lucas's lawyer declined to comment.

    The defendants are charged with conspiring with Lucas to commit fraud by false representation as well as a separate charge of fraud by false representation. They deny wrongdoing.

    The trial is expected to last five months. The defence will later present its case.

    Barclays paid Qatar 322 million pounds ($393m) in fees that were not disclosed in public documents, such as the prospectuses and subscription agreements that outlined payments and commissions paid to investors as incentives for their support.

    The prosecution alleges that the defendants breached well-established banking practice, under which all investors should be paid equally, and disguised these fees as "bogus" advisory services agreements.

    Brown said Barclays lawyers wanted evidence of services to justify the fees the bank was paying Qatar - and he alleged the defendants and Lucas had made "after-the-event" attempts to demonstrate some services had been provided.

    But he added: "These did not come close to justifying the huge amounts paid over to the Qataris and, you may well conclude, were nothing more than a smokescreen to seek to legitimise what had gone before."

    Qatar Holding, part of the Qatar Investment Authority sovereign wealth fund, and Challenger, an investment vehicle of former Qatari prime minister Sheikh Hamad bin Jassim bin Jaber Al Thani, invested about four billion pounds ($4.9bn) in Barclays over 2008.

    Brown told the jury that the Qataris demanded more than double what the bank had agreed to pay other investors and the defendants, knowing Barclays needed to strengthen its balance sheet in volatile markets, wrestled with how to pay them.

    Jenkins, the former chairman of the bank's Middle East investment banking arm, Kalaris, who led the bank's wealth division and Boath, a former European head of corporate finance, are charged with fraud and conspiracy to commit fraud by false representation over the first fundraising in June 2008.

    Jenkins also faces both charges over the second fundraising that October.

    SOURCE: Reuters news agency