The City watchdog could fine Barclays up to £50m for failing to disclose a deal struck with Qatar at the height of the financial crisis, reviving a controversial episode that failed to gain traction in UK courts.
The provisional fine – which Barclays is in the process of appealing against – relates to the £322m the bank paid to Qatar in 2008, allegedly in exchange for the gas-rich Gulf state investing £4bn, helping save the lender from a UK government bailout.
The fees were seen by critics as a way for Qatar to effectively purchase Barclays shares at a heavily discounted price that was not offered to other investors.
The findings from an investigation by the Financial Conduct Authority (FCA) released on Friday has determined that those fees, which were paid in two tranches in 2008, were not properly disclosed.
“Barclays’ failure to disclose these matters was reckless and lacked integrity, and followed an earlier failure to disclose fees paid to Qatari investors in June 2008,” Mark Steward, a director of enforcement and market oversight at the FCA, said.
“There was no legitimate reason or excuse for failing to disclose these matters, certainly no basis for doing so because of the financial crisis. Due transparency is always critical to financial markets, especially in times of market or financial stress,” Steward added.
While the FCA provisionally plans to fine Barclays £50m, that sum will hinge on the outcome of the bank’s appeal to the FCA’s upper tribunal. Qatar’s sovereign wealth fund, the Qatar Investment Authority, still holds a 6.3% stake in Barclays.
The FCA originally revealed it was investigating the controversial fee arrangements back in 2013, but paused its investigation during a criminal trial launched by the Serious Fraud Office (SFO). However, the SFO failed to win a trial against Barclays over the Qatar deal, and the case collapsed in 2018.
The SFO later lost a case against a trio of Barclays executives – who were accused of devising fraudulent advisory services agreements in order to disguise the payments to Qatar – following a five-month trial.
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It was the only criminal case brought against banking bosses for their actions during the financial crisis, but all three were found not guilty of fraud by a UK jury in February 2020. The case cost the taxpayer £9m-£10m.
A Barclays spokesperson said: “Barclays has referred the findings of the regulatory decisions committee to the upper tribunal for reconsideration.”