Former Barclays chief Varley on trial

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This financial times podcast is supported by capital. One capital. One is reimagining banking by offering accounts with no fees are minimums that can be opened from anywhere in five minutes. Capital one. What's in your wallet capital? One NA. From the newsroom of the financial times in London. I'm Samson more than a decade after Barclay's turn to Middle Eastern investors for rescue fans joined the financial crisis a joy in London has begun hearing the case against the bank's former chief executive and three senior colleagues. He stunned accused of defrauding the market Patrick Jenkins. Discusses waters emerged from the case. So far with Carolina Benham and Jane Croft who have been covering the trial. Caroline. And Jane, your tag, teaming in the legal case has been brought by the Serious Fraud Office against four former directors of the Bank, and this is of course, over the two thousand and eight capital raising when there were alleged inducements paid to the Qatari investors who pumped billions of pounds into the Bank and helped save it and see off the threat of UK government, capital injections slash nationalization. Caroline, tell us about the background to this in a bit more detail. What exactly are the allegations against these four people? What did they do? And how do they all come about? Say this is the Serious Fraud Office his case against John Varley who is the chief executive of Barclays at the time in two thousand and eight and then three of his top left tenants. Roger Jenkins who was the swashbuckling dealmaker for the Middle East at the time. Tom Clarke who headed up wealth management, and then Richard both who worked in the investment banks financial institutions group say the alleged that the four conspired to pay the Qataris secret fees that want disclosed the markets or to other investors through water, Niners advisory services agreements, and the F O's say that these deals were essentially just a smokescreen to pay the Qataris the extra fees. They were demanding to invest now. This is the first case that we've seen against a major Bank Siu four actions taken during the financial crisis. You remember that Fred Goodwin all the other chief executives of banks during the financial crisis. Very little really has ever happened. So the this is the one case that we've seen get to a jury trial the emanates from the financial crisis. Jane, tell us what the latest is. They've been in court now for a few days. We've heard a few days of evidence. It was quite some time before the jury was able to be selected given this is supposedly going to be a six month commitment what's been the juiciest evidence. So far. I mean, what we heard so far is the prosecution opening which has taken about sort of five days where the SFO's opened their case. So we haven't yet heard of live witnesses, but we've been given an overview of the case of jewelry have. So some interesting things have come out. There's been emails and details telephone conversations between the executives one in which John Varley. The former chief is at your thought is was described as being scared to death about the UK government stepping into nationalist ball quiz at the height of the two thousand and eight financial crisis. Bob diamond who is not on trial was to charge. The being paranoid about UK Kookmin stepping in to do this and wrote to gen. Skains expressed concern in a conversation. He had with Richard both panicking Balkars is about to be nationalized not to two thousand eight and panicking because as he puts it the UK government wouldn't look kindly on compensation over a million dollars. Obviously should if Baucus has gone into public ownership. The UK government would have looked at bonus compensation structure and dividend policies as well just to be clear to listeners women talking about compensation here. This is the rather unpleasant terminology that bankas us to talk about pay not that I've really been compensated for anything. But this rod that depressing isn't Carolina that you know, I remember talking to John valley at the time and others within the Bank about their concerns about UK government bailout, and it was all about the damage to shareholders damage to Britain the damage to the kind of European banking setup. But at least some people seem to be informal concerned about their own pay levels than anything else. Well, that's certainly tree. I mean, I think some of the transcripts that. We've read in court and. We've heard in fan cools highlight bit, Mr. volley wasn't deed worried about the strategic direction of the Bank had it been nationalized. But also is pretty clear that certainly front of mind for many of those involved was the fact that they probably wouldn't be able to get that multi-million-pound bonuses. I mean for this fundraising alone. Russia Jenkins was paid to twenty five million pound bonus. And indeed the jury's heart a memo demanding payments to that effect. I mean, I think one of the things that this case has done is really lift the lid on the frenetic deal making that happened and just the down to the minute negotiations that had to happen in order for Barclays to get this away and stay out of the hands of UK government control. Of course at the time. It was Hales is a great success. When robot Scotland walls being bailed out in an emergency rescue by the British government, h boss was falling over Lloyds, very soon. After as Jane, you covered at the time as banking correspondent was bailed out as. Well, and of course, Barclays looked like he's got the capital at that it needed without any downside, albeit a rather expensive but have capital, but it's rather coming home to roost now. Absolutely enemy today. We heard the prosecution alleged the, you know, the prospect of UK government bailout was very unattractive ball lease. Because it would mean it limited the flexibility of the Bank. But it also meant some of the people talk about because would have to leave, you know, some of the top executives would have to leave as a result of taking tax payer money and also levels of remuneration would be attacked at Barclays, and as I say, we've heard this kind of memo today from Roger Jenkins who was basically sort of saying that he ought to be paid a bonus as a result of his attracting Qatari capital and ensuring that Baucus didn't have to take tax payer money. I mean, he sought said, you know, he basically saved the Bank, and he deserves the money to save our asses and jobs, eloquent, Carolina, explained one thing. Why is it these four individuals and not any others on indeed, not the Bank itself that is on trial you, yes. We obviously have to be a little bit careful in what we say. Well, they're alive proceedings. But one thing we are positively allowed to report is that previous SFO charges against Barclays the corporate with scrubbed late last year in quite a blow to the case. And particularly the Bank could been charged with as well as frauds the same as the human defendants as we call them also in relation to a three billion dollar loan that it gave to Qatar just as the second fundraising was closing. So those parts of the surveys case are no longer part of the trial. So Jane, where does it go from here as I said, I think the jury has been told to expect this to run to six months where clearly only in the first few days. What are we going to hear next, and what are you braced for basically the opening is light to finish this week sometime? And then I think we getting into witnesses. So we haven't got to witness list yet or an order of witnesses. But we know certain individuals are going to give evidence including Marcus ages who is chairman of Barclays at the time. So what he says? Well, obviously be very interesting. And then after that, obviously wants the persecution cases finished the defense case will begin and again that could last some time so he could be six months with his trial. Just one final thing than Jane us. He as I said you covering the banks at the time, the Qatari investors that came in with their multibillion, bailout full Barclays, what was in it for them really setting aside, the alleged payments of inducements, why did they invest in Barclays? And of course, they invested in quite a few banks right across Europe at the time. Yeah. I mean, I think the trials hood some evidence that Barclays was an attractive proposition for the Qataris. But obviously, the Qataris are not part of the case nobody from the kettle investments investment thority is giving evidence in the trial. And you've got to basically remember that the Qataris with the purchases here, they didn't have the disclosure abbreviations that Barclays had dinner they're not on trial here. But obviously, they saw the Bank has a attractive proposition in this. Two thousand and eight banking crisis. And I think it is to be remembered the at she sunny. This was true just before the trial started when I checked it costs remain. Barclays lotta shareholder. They've been through ups and downs of a sin. Suddenly just like that positions in other banks in Europe, not least torture Bank. But. That is another story has we have reports many times people on thank you both very much. That was Patrick Jenkins financial editor talking to Caroline Benham financial regulation. Correspondent and Jane Croft are low coats correspondent will be back with another niece feature. More. In the meantime, if you also ready a subscriber and would like to discover more F T content. Do you take a look at our latest subscription offer that F T dot com slash offer. This financial times podcast is supported by capital on capital. One is building a better Bank one that feels an axe nothing like typical Bank. It's why they're reimagining banking and building something completely different. They offer accounts with no fees or minimums. They also offer one of the best savings rates in America, and you can open a Capital One account from anywhere in five minutes, Capital One. This is banking reimagined open an account today. Inexperienced banking reimagined for yourself capital. One. What's in your wallet capital? One NA.

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