SFO announces charges in Barclays Qatar capital raising case
The Serious Fraud Office ("SFO") announced today that Barclays and four former senior executives have been charged with conspiracy to commit fraud and the provision of unlawful financial assistance. The charges relate to the events surrounding Barclays' £11.8bn emergency fundraising in the 2008 financial crisis.
The charges are the culmination of a 5 year investigation into arrangements collateral to the fundraising. The allegations are that those charged falsely represented the true position with regard to the terms of the Qatari's involvement in the fund raisings.
Barclays is the subject of a parallel investigation by the Financial Conduct Authority, who determined in 2013 that Barclays should pay a £50m penalty for disclosure violations and have now reopened that investigation.
The US Department of Justice and the US Securities and Exchange Commission are also investigating.
Further, Barclays is facing civil litigation brought by agents claiming commission for the deals and, seperately, by shareholders. At this early stage, there are some interesting points to take note of:
- Barclays has not been given a Deferred Prosecution Agreement ("DPA"). This is, perhaps, unsurprising. The SFO has emphasised in previous DPA cases that "self-reporting" and "extraordinary cooperation" are factors in obtaining a DPA. Barclays did not self-report any wrongdoing or fully cooperate with the SFO's investigation. In particular, Barclays resisted disclosure of 100,000 documents on the basis of privilege. The SFO had to issue an application to force disclosure to which Barclays acquiesced, in part.
- This serves as a timely reminder to all corporates that privilege issues need to be considered at the very outset of an investigation and a protocol agreed upon. This will help to limit challenges to privilege at a later date.
- Establishing corporate criminal liability on the part of Barclays will be an onerous task for the SFO. For a company to be convicted of the criminal offences with which it has been charged, it is necessary to establish that the offences were committed by the "directing mind and will" of the company. This is often difficult to establish, particularly against companies with complex management structures. However the individuals charged by the SFO in this case are arguably sufficiently senior to meet the test. This could explain why both the company and the individuals have been charged. As things stand, Barclays is at risk of becoming the most high profile company in the UK to be held criminally liable for its employees' conduct.
- Had the complained conduct taken place after the Bribery Act 2010 had come into effect, the SFO might have pursued a charge of failing to prevent bribery under section 7. This is a strict liability offence, and places a burden on companies to show they have adequate procedures in place to prevent bribery. There would be no requirement to meet the additional "directing mind and will" test.