The Serious Fraud Office has raised the possibility of offering Barclays a deferred prosecution agreement as part of its long-running investigation into the way the bank raised billions of pounds from Middle Eastern investors during the height of the 2008 banking crisis.
The fraud-busting agency, under pressure after botched investigations, has issued a number of letters to companies it is investigating about entering into its first DPA, which require co-operation from companies but also means they need to admit to offences. These DPAs are similar to powers that US regulators have and were first handed to the SFO last February.
Barclays, which said that it had notbeen offered such a settlement formally, has been subject to an SFO investigation for at least two years in relation to the way it embarked on crucial cash calls during the banking crisis. The SFO refused to comment.
The bank – currently being run by chairman John McFarlane after Antony Jenkins was ousted as chief executive earlier this month – admitted two years ago that the City regulator, the Financial Conduct Authority, had issued it with a £50m fine for “reckless” behaviour in relation to the cash calls which took place a time when rival banks were being bailed out by taxpayers. Barclays is contesting this finding, which has been put on hold while the SFO investigation continues.
Barclays’ previous legal disclosures into the FCA’s findings shed light on the subject being investigated. According to these disclosures, the FCA has concluded the bank should have provided more information about the £322m of fees over five years that were due to Qatar Holdings, which backed the crucial fundraisings. Barclays has said it disclosed this fee arrangement in the June 2008 £4.5bn fundraising but not in the following one in October 2008. The regulator, according to Barclays, said these payments were for Qatari participation in the fundraisings.
Barclays’ half-year results next Wednesday will be scrutinised for any sign of developments in the SFO’s investigation which continues to hang over the bank after a series of hefty fines from the FCA for rigging Libor, gold and the foreign exchange markets.
Ahead of that next scheduled update to the market, Barclays said: “We are not in a position to comment on an ongoing legal matter, save to clarify that there has been no offer made of a DPA”.
The SFO refused to comment but in May one of its senior directors made it clear that the agency was keen to use DPAs as a way of progressing investigations.
“We have issued our first invitation letters giving corporates the opportunity to enter into DPA negotiations. Where we are now is working with corporates on how best to go through that process - not ‘why DPA’ but ‘how DPA’,” Ben Morgan of the SFO said in May. “And when it comes ‘how’ the DPA code is clear; we and the court need to co-operate fully with our investigation,” he told the audience at the time.
Barclays has previously disclosed that its former finance director Chris Lucas is among those facing personal investigation while the chief executive at the time, John Varley, is also thought to be facing scrutiny.
Under the new approach being adopted by the SFO, companies are being urged to offer more co-operation. Morgan said in May: “Our stance is to ask for genuine co-operation with our investigation, not duplication of it. We don’t expect you keep us in the dark while you carry out extensive private investigations and some months or even years later present us with a package of your findings”.
In a wide-ranging speech, Morgan concluded: “Remember that engaging with us doesn’t necessarily mean a criminal sanction at all. We are not looking for scalps.”
The SFO may be hoping that McFarlane, who became chairman three months ago, is ready to sanction the possibility of entering into a DPA with the SFO.
When Barclays announced earlier this month that Jenkins was leaving, McFarlane said he wanted to inject more growth in to the bank and cut out inefficiencies. This has sparked speculation that future job cuts could be possible on top of 19,000 announced by Jenkins last year.
This article was written by Jill Treanor, for theguardian.com on Tuesday 21st July 2015 20.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010