The Court of Appeal has today dismissed all charges of fraud against Barclays' former CEO John Varley. The charges related to fundraising in 2008 whereby it is alleged payments of £322m were made to Qatar to secure investment of billions of pounds. The investment allowed Barclays to avoid a government bailout during the financial crisis. The SFO charged Barclays PLC, Varley and three other individuals in June 2017 with conspiracy to commit fraud and the provision of unlawful financial assistance, charging Barclays Bank Plc in February 2018. These charges came after a five year investigation and the expenditure of £15m of special funds.
The decision of the Court of Appeal comes following the dismissal of all charges against Barclays PLC and Barclays Bank Plc in May 2018 and the SFO's unsuccessful application to reinstate those charges later that year. It also follows the discharge of the jury in the trial against Varley and the three bankers in April this year. The SFO challenged the trial judge's decision that there was no case to answer but the Court of Appeal upheld the judge's ruling that there was insufficient evidence to provide a realistic prospect of conviction against Varley for the case to continue against him. However, the SFO managed to avoid a total wipe-out as the Court of Appeal ordered that the remaining three individuals stand retrial. Whether anyone will finally be held accountable at Barclays remains to be seen and a date for the retrial of the remaining defendants has not yet been set.
Mr Varley was the only CEO of a large bank to be prosecuted following the financial crisis and his acquittal, along with that of the corporate Barclays entities, will add to criticism of the SFO that it is unable to hold senior management and corporations to account for wrongdoing. This is yet another high profile failure for the SFO following the collapse of a 2016 trial against brokers accused of helping the convicted trader Tom Hayes rig the Libor rate and the collapse of the trial in December 2018 of Tesco executives.
There are clear parallels between the collapse of the prosecutions against Varley and the Tesco employees which raise serious questions about the quality of the evidence the SFO is relying on when seeking to prosecute cases following lengthy and expensive investigations. In relation to Tesco, following the misstatement of profits coming to light and an investigation by the SFO, Tesco Stores entered into a Deferred Prosecution Agreement (DPA) with the SFO. This included a statement that three senior ex-employees had dishonestly perpetuated the misstatement of expected profits. As a result of the DPA the corporate Tesco entity avoided prosecution but the individuals were prosecuted for fraud and false accounting. However, over four years after the charges were brought the trial collapsed because the SFO failed to provide sufficient evidence that the individuals had acted dishonestly. As with Varley, it was decided they simply had no case to answer. For a trial judge to pull the plug on proceedings after the conclusion of the prosecution's case for lack of evidence is unusual and highly embarrassing for the SFO, which is meant to be the UK's leading investigator of complex fraud. From a business perspective, the failures of the SFO to secure the conviction of individuals further calls into question the desirability for companies to engage with the DPA process.