Barclays fined £50m for secret Qatar payments
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Barclays fined £50m for secret payments in Qatar: Bank accused of ‘lack of integrity’ during 2008 emergency call
- Barclays paid £322million in ‘consultancy costs’, reportedly in return for £4bn investment
- Although Barclays announced a cash injection, it did not disclose any fees it had paid
- Financial Conduct Authority has been investigating transactions since 2013
- Payments would have been ‘very relevant information’
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Barclays was labeled ‘reckless and without integrity’ as it was fined £50 million for its secret deals with Qatar during the financial crisis.
Desperate to avoid a bailout in 2008 like rivals Natwest and Lloyds, Barclays paid £322 million in ‘consultancy costs’ to a Qatari firm, reportedly in return for a £4 billion investment.
Although Barclays announced the cash injection by Qatar, it did not disclose what fees it had paid.
Fine: Although Barclays announced Qatar’s cash injection, it did not disclose the fees it had paid
The Financial Conduct Authority (FCA), which has been investigating the transactions since 2013, said the payments would be “very relevant information for shareholders, investors and the wider market.”
It said this was especially the case as the disclosed costs of the fundraising “were already considered very expensive.”
Mark Steward, executive director of enforcement at the FCA, said: “At the height of the financial crisis, Barclays paid hundreds of millions of pounds in fees to certain Qatari investors so that they would bring in new capital.
“Barclays has not informed the market and shareholders of these matters as required.
‘Barclays’ failure to disclose these matters was reckless and dishonest, and followed a previous non-disclosure of fees paid to Qatari investors in June 2008. There was no legitimate reason or excuse for not disclosing these things, certainly no basis for doing so because of the financial crisis.”
Barclays said it would appeal the ruling.
The Qatar saga has haunted the lender for years, seeing him dragged into several lawsuits.
In 2020, the bank was unsuccessfully sued by Amanda Staveley – a financier who acts on behalf of investors in Abu Dhabi – when she alleged that the bank had offered its client a worse deal than Qatar. Barclays was “guilty of fraudulent misrepresentation,” a judge ruled, but Staveley could not claim damages because the court said her company was unable to fund the deal after all.
Still, the case turned out to be a bruise for Barclays as it exposed the sexist attitudes of former bankers. Stephen Jones, a Barclays manager at the time, labeled Staveley a “fat ass ***” and referred to her “big breasts” in a conversation with a colleague. Roger Jenkins, the former chairman of Barclays’ Middle East business who earned the nickname “Big Dog” because he was once one of Britain’s highest-paid bankers, called Staveley a “pie.”
Critics argued that the fees paid to Qatar in 2008 in two tranches in 2008 enabled the Gulf state to buy Barclays shares at a price much lower than was available to other investors. The investment was crucial for Barclays, which, like other banks, faced a cash shortage during the financial crisis as the money markets dried up.
Qatar’s support for the bank helped pave the way for others to follow suit, including Abu Dhabi’s Sheikh Mansour, Singaporean state investor Temasek and Japan’s Sumitomo Mitsui Banking Corp. In total, Barclays raised approximately £11 billion in 2008 through two capital increases.