BY Matt Atkins
The UK's Serious Fraud Office (SFO) has ramped up its probe into Barclays's dealings in the Middle East, according to the Financial Times. Former chief executives Bob Diamond and John Varley are due to be questioned under caution by the SFO, along with other senior executives, about alleged corruption in the bank's arrangements in Qatar.
The SFO is hoping to impose a £50m fine on the bank for failing to disclose £322m in 'advisory fees' paid to Qatari investors, a charge which Barclays contests.
Barclays received Qatari investments worth £4.6bn in two emergency fundraisings in June 2008 and October later that year. The capital raisings, which came to £11.8bn in total and relied heavily on Middle East money, saved Barclays from part-nationalisation in the wake of the financial crisis. The 'advisory services' agreement with Qatar was disclosed in the June capital raising, but not in the October one, contests the SFO. The fees were not mentioned at all.
Barclays disputes the fine on the grounds that the advisory fees did not have to be disclosed under the FCA rulebook. The FCA takes issue with this argument, claiming the payments do not count as advisory fees.
That the current round of questioning comes under caution suggests the SFO believes it has reasonable grounds to suspect the interviewees have committed an offence. Such interviews, however, do not require arrest and can be scheduled by appointment, as has been the procedure in this case. No charging decision will be reached until the interviews have been conducted.
As the alleged offence dates back to 2008, the ultimate risk for Barclays is a corporate prosecution under the UK’s old corruption laws, since overhauled by the 2011 Bribery Act. Under these laws, the SFO must prove that a so-called directing mind of a company knew of and ordered bribes.
Just last week, Barclays launched a major restructuring plan aimed at boosting sluggish profitability. This news could hardly have come at a more inconvenient time and will surely prove an unwanted reminder of the issues hanging over the bank.