The Serious Fraud Office has come under fire after three Barclays executives were cleared of fraud in just five hours over a £4billion investment deal with Qatar.
Scotsman Roger Jenkins, 64, was said to be Barclays’ ‘gatekeeper’ to the wealthy Middle Eastern state, and in 2008 helped the bank with two large capital raisings to avoid a government bailout.
He was accused alongside Tom Kalaris, 64, and 61-year-old Richard Boath, of lying about interest rates they were paying to the Qataris for the loans to ward off the bailout in the 2008 financial crisis.
But the trio’s acquittal, after a five-year investigation which cost £15million, prompted legal figures to say there were ‘serious questions’ about the SFO’s decision to pursue the case.
And speaking outside court, Boath said he felt ‘very relieved’ about the verdicts and that the case against him and his former colleagues was a ‘complete invention’.
In June 2008, Barclays secured £4.4 billion, with £1.9 billion invested by Qatar, followed by a second tranche in the autumn of £6.8 billion, of which £2.05 billion was from Qatar.
The Serious Fraud Office (SFO) alleged the lucrative terms given to Qatar, including an extra £322 million in fees, were hidden from the market and other investors through bogus advisory service agreements (ASAs).
But multi-millionaire Jenkins, who was linked to a string of glamorous women including supermodel Elle MacPherson, was on Friday acquitted of fraud, alongside former colleagues Kalaris and Boath at the Old Bailey.
The trial came after a previous £5m case against the executives, and former chief executive John Varley, 63, collapsed last year at Southwark Crown Court.
Jessica Parker and Peter Binning, partners at Corker Binning, who represented Mr Varley at the first trail, said the case raised ‘serious questions’ about the SFO.
‘All defendants in the SFO Barclays Qatar re-trial were acquitted today by an Old Bailey jury after just five hours deliberation,’ she said.
‘The trial had lasted five months. Our client, John Varley, was discharged at the first trial in April 2019 when the trial judge ruled he had no case to answer.
‘The prosecution appeal failed. Today’s verdicts finally bring this very long-running prosecution to an end.’
She added: ‘The verdicts raise serious questions about the SFO decision to bring the case.’
The charge against Jenkins, Kalaris and Boath alleged that they conspired together ‘to commit fraud by making a false representation, namely within documents relating to Barclays’ capital raising of June 2008, intending to make a gain, namely or cause loss to another, or exposing another to a risk of loss.’
Mr Jenkins was said to be Barclays’ ‘gatekeeper’ to the wealthy Middle Eastern state, and in 2008 helped the bank with two large capital raisings to avoid a government bailout
The jury of seven women and five men deliberated for around five-and-a-half hours following a five-month trial.
Speaking outside court, Mr Boath said: ‘I was very surprised they [the SFO] brought the case. Frankly it was a complete invention on the part of the SFO and they should really never have brought it.
‘So, I’m just thrilled.’
Boath said living through the investigation and prosecution had been ‘tough’, adding: ‘Obviously there are ups and downs. But today is a big up.
‘I think it’s the uncertainty, it’s the not knowing of what’s going to happen is the worst thing.
‘And particularly as I couldn’t have frankly done more in 2008 to make sure the bank didn’t do anything that it regretted.’
A previous £5m case against the executives, and former chief executive John Varley, 63, collapsed last year at Southwark Crown Court.
Mr Justice Jay ruled at the time there was ‘no evidential case to answer for Varley and no case to answer on legal grounds for all four defendants’.
But the SFO appealed the decision at the High Court and were able to bring a retrial against Boath, Kalaris, and Jenkins – only to lose again.
It is just the latest in a series of disastrous prosecutions by the SFO which will now face calls for a complete overhaul or abolition.
At the time of the alleged fraud, each of the defendants held very senior positions at Barclays, jurors heard.
Jenkins was Barclays Capital (‘BarCap’) executive chairman of investment banking and investment management in the Middle East and North Africa; Kalaris was Barclays’ wealth management CEO and Boath was Barclays Capital head of financial institutions group for Europe, Middle East and Africa.
In June 2008, Barclays secured £4.4 billion, with £1.9 billion invested by Qatar, followed by a second tranche in the autumn of £6.8 billion, of which £2.05 billion was from Qatar
Prosecutor Ed Brown QC told jurors: ‘They acted dishonestly in order to preserve the future of the bank and to preserve their own positions.’
The defendants denied wrongdoing, with William Boyce QC, for Boath, describing the allegation as ‘preposterous’.
Mr Boyce told jurors: ‘The SFO have to prove that Roger Jenkins and Sheikh Hamad agreed a sham contract … this despite the fact that it was obvious to both sides that a long-term strategic relationship was in both their interests.’
Jenkins, of Malibu, California; Kalaris, of Thurloe Square, West London; and Boath, of Henley-on-Thames, were acquitted of conspiracy to commit fraud by false representation and fraud by false representation between May 1 2008 and August 31 2008.
Jenkins was also acquitted of two similar offences dated between September 1 2008 and November 30 2008
Jenkins was also acquitted of two similar offences dated between September 1 2008 and November 30 2008.
Jurors were told that a fourth man, Christopher Lucas, had been found unfit to face trial due to illness.
The latest prosecution failure by the SFO comes after Michael Sorby, Adrian Leek and David Justice were all cleared by a jury at Southwark Crown Court of taking part in a bribery plot for their former employer, metals company Sarclad.
Their case followed the failure of the SFO’s case against three former Tesco executives in relation to a £250m accounting scandal in January 2019 and its decision to abandon a case against former executives at Rolls-Royce in February.
In those three cases the SFO had made ‘Deferred Prosecution Agreements’ with the companies in which they self-reported in return for avoiding prosecution as a corporation.
But every time the SFO then bungled the trial of the individual executives.
In the latest trial, Jenkins told the court the prosecutors had ‘no idea’ how banking worked.
The flamboyant Scot’s barrister John Kelsey-Fry said: ‘You might think there have been so many hares set running by the prosecution that the field is positively flooded with them, all crashing into one another, and they are all fatally diseased with myxomatosis’.
Boath’s lawyer Mr Boyce said the SFO case against him was ‘entirely misconceived’ and ‘absurd.’
In a call between Boath and Kalaris played before the jury the pair discuss how the services agreement, supposedly for advice from the Qataris, would be kept distinct from the investment fees, called the subscription agreement.
In the recording, Boath explained to Kalaris that the bank’s position would be that: ‘whatever we do will not be related to this subscription agreement, but frankly we all know that whatever we enter into we are entering into in exchange for the subscription agreement.’
A previous £5m case against the executives, and former chief executive John Varley (pictured), 63, collapsed last year at Southwark Crown Court
Kalaris replied: ‘Yeah, yeah that’s right. None of us wants to go to jail here.’
‘It ain’t worth it and apparently the food sucks,’ continues Boath.
‘No, the food sucks and the sex is worse,’ jokes Kalaris.
Prosecutors claimed the bankers raised £11bn in emergency fundraising in 2008, by making secret payments to the Gulf state in a separate deal called an advisory services agreement.
Sheikh Hamad and Qatar Holdings invested more than £4 billion during two rounds of capital raising at the height of the financial crisis.
Prosecutor Ed Brown said the full extent of the deal was covered up by the defendants in order to protect their multi million pound bonuses.
During a discussion between Kalaris and Boath, the pair agree to send a draft letter of the advisory agreement via fax.
‘I don’t want to sent it by email,’ explained Boath.
Kalaris said: ‘Well just fax: it over.’
‘That’s secure is it?, Boath then said.
‘Yes, its right next to us,’ replied Kalaris.
But Boath insisted: ‘It wasn’t that I was trying to conceal anything, I was simply nervous because I knew it was highly sensitive.
‘I was, I think, cautious because I didn’t want to be criticised for circulating something on email that was obviously sensitive.’
Who are the former Barclays executives who were cleared of fraud
Roger Jenkins – Barclays Capital Executive chairman of investment banking and investment management in the Middle East and North Africa
Once dubbed Britain’s best-paid banker, Jenkins held the golden key to the Qatari deal – a personal relationship with former prime minister Sheikh Hamad bin Jassim bin Jabr al-Thani.
Jenkins owned 60 million pounds of Barclays stock and was recommended for a 25 million pound bonus for his work on the 2008 fundraisings.
The Scottish-born former sprinter, who earned millions at Barclays devising complex tax structures, helped secure a second deal with Qatar in October 2008 despite suffering a heart attack two months earlier.
Once dubbed Britain’s best-paid banker, Jenkins held the golden key to the Qatari deal
On June 26, 2008, Barclays’ then CEO John Varley emailed Jenkins saying: ‘We could not have done what we have done without the pivotal role you played. Thank you for the extraordinary skill and tenacity.’
By the time he left Barclays in 2009 to become an independent consultant, he had amassed a 120 million pound fortune, according to the 2009 Sunday Times Rich list.
Tom Kalaris headed Barclays’s wealth division
Tom Kalaris – Barclays wealth management CEO
The investment banker, who headed the bank’s wealth division, was the trusted lieutenant of Bob Diamond, the charismatic American who would succeed Varley as CEO. Kalaris left the bank in 2013.
Born in Tripoli, Libya, to a senior American diplomat father and civil rights lawyer mother, Kalaris spent his formative years at JPMorgan before joining Barclays.
Married for 41 years with five children, Kalaris described himself during the trial as the ‘quarterback’ in the pressure-cooker atmosphere at Barclays during the 2008 fundraisings.
He was hand-picked by Diamond because of his even temperament and helped shield Boath from excessive demands from the bank’s top management.
Kalaris, now 64, has a ‘highly developed sense of duty, akin to that of a professional soldier,’ ex-Barclays chairman David Walker said in a character witness statement read in court.
Richard Boath – Barclays Capital head of financial institutions group for Europe, Middle East and Africa
The SFO case hinged on the recorded telephone calls and interviews with now 61-year-old Boath, the former European head of the investment bank’s financial institutions group.
Boath was the only one of the defendants to answer investigator questions in 2014 and 2016 — and the only one not to testify at the Old Bailey criminal court.
He was picked to help execute the June 2008 fundraising, despite his background in the separate discipline of debt deals.
By a quirk of bank practice at the time, the fact he sat on the trading floor meant his phone calls were recorded, unlike the other bankers in the case.
Boath was fired in 2016 after a 15-year career at the bank and is suing Barclays over whistleblowing, pay and unfair dismissal. He alleges he was dismissed because of what he told SFO investigators.
His case has been put on hold pending an outcome of the criminal prosecution. ($1 = 0.7608 pounds)
(Reporting by Kirstin Ridley and Lawrence White; Editing by Alexander Smith)