The UK serious fraud office has alleged that Barclays received illegal financial help at the time of the 2008 financial crisis.
The FCA re-opened the case last year over the allegations, and now Barclays have been charged for a second time. In 2008 it engaged in “emergency fundraising” in order to survive the financial crash which saw many banks close their doors for good.
Four of the former senior executives and the parent company of Barclays had criminal charges brought against them by the UK’s Serious Fraud Office previously, and now added to that list is the new charge of unlawful financial assistance against Barclays Bank itself, which is one of the main operating subsidiaries of the umbrella company.
This has particular importance because of the level that the charge is being applied at. As the FCA manages whether or not a financial lender can have a licence, and deal directly whether it is “fit and proper” to lend, any sever repercussions from this could result in Barclays loosing their FCA licence.
Barclays are intending to full defend all the charges relating to the emergency fund raising, and do not expect there to by any major impact on the resulting services or employees as a result of these charges.
There aren’t many previous examples of banks facing criminal charges in the United Kingdom, so it’s difficult to decide if it’s likely that Barclays will be found as innocent or not. All banks involved with mis-selling and market manipulation in the USA carried on with their licence after trials. In France the bank BNP Paribas lost part of its licence for one year after a trial result.
There have been serious discussions about bringing this additional charge to Barclays since last June, when the initial charges against the executives and parent company were issued. There are rumours that pressure is being applied for an out of court settlement.
Whilst the bank appears to be fighting all charges brought against it, it may also be hoping for a more lenient sentence based upon the circumstances. This is because of the length of time between the offence and the charges (almost 10 years), and the fact that the 2008 financial crash was such a global and widespread problem that no one predicted that it would count as an unforeseeable event.
The Serious Fraud Office have charged the parent company with 2 counts of fraud by false representation, and one count of unlawful financial assistance which refers to the agreements between them and Qatar at a similar time to when the state engaged in two fundraising activities between June and October of the year 2008.
John Varley was also charged (he is the formed CEO), with both of the same counts. To this date this is the only CEO who has been officially charged with criminal wrong doing during the financial crisis.
These charges are referring to an advisory services agreement between Qatar and Barclays bank which was worth £322 million, and was first agreed to in June 2008, and then finalised in the October 2008 deal. There are also reports that Barclays shortly after loaned the Qatar ministry $3billion as the deal was closing.