Barclays’s Jenkins Justifies Demand for $33 Million Bonus
Former Barclays Plc executive Roger Jenkins justified his demand for a 25-million pound ($33 million) bonus at the height of the 2008 financial crisis, arguing that he saved the bank by securing an investment from Qatar that allowed it to dodge a U.K. government bailout.
On Friday, Ed Brown, a prosecutor for the Serious Fraud Office, asked Jenkins about his demand during the fifth day of cross-examination in a London court. Jenkins and two other former Barclays executives are on trial for fraud in connection with the Qatari investments.
As the Middle East head of investment banking, Jenkins secured 4 billion pounds in two cash injections from Qatar in June and October 2008 by cultivating a close relationship with former Qatari Prime Minister Sheikh Hamad bin Jassim Al-Thani. After securing the October deal, Jenkins asked his manager Rich Ricci why the bank wasn’t meeting his bonus request.
“This capital did the trick,” Jenkins said in a November 2008 email to Ricci, which Brown showed the jury. “No one else in the organization or at any other bank except Credit Suisse did this did it four times this year to save our arses and jobs. Guys you know the sell! If not what is the plan?”
When Brown asked about the email and the 25-million pound figure, Jenkins said the endless negotiations to secure the deals took a toll on his health, family and marriage. In August 2008, Jenkins had a heart attack and was asked to return to work within days, he said. He also started a divorce that year, he added.
The next year Barclays agreed to pay Jenkins a settlement when he left the bank, he said. Jenkins also said he was angered by press reports about his wife’s role in the Qatari relationship and that he was trying to support her desire to have a larger profile in order to save his marriage.
“I had taken considerable risk to both health and family and indeed my marriage to do this,” Jenkins told the jury. “It was generally understood that that was the general level for what I did in that year to raise that amount of money to keep the bank independent. I felt that maybe they weren’t going to deliver.”
Barclays paid Qatar and Sheikh Hamad 322 million pounds via two advisory services agreements, or ASAs, in connection with the two 2008 capital raisings. While the SFO alleges that these were nothing more than investment commissions and should have been disclosed to shareholders, Jenkins said Barclays got value from the deals through the expanded networking opportunities and deals the Qataris could provide. Jenkins and the two other defendants deny any wrongdoing.
Jenkins said he became “quite irritated” with colleagues who were unable to resolve last-minute issues which threatened to derail the deal, including protection Qatar sought in case its shareholding was diluting by a government bailout.
Sheikh Hamad drove a hard bargain, Jenkins said, and wanted to ensure that his entry price into Barclays across the June and October investments was low enough to make it worthwhile for him and Qatar. In late October, Sheikh Hamad lowered his expected entry price from 150 pence to 130 pence, requiring Barclays to increase the fees paid under the second ASA.
While Jenkins remained in control of his emotions during the fifth day of cross-examining, the exchanges between him and Brown at times became slightly testy, with Jenkins and the judge twice asking Brown to be more precise about his questions.
Brown questioned why the second ASA shot up to 280 million pounds without an apparent calculation of whether the Qataris would deliver services of the same value. Jenkins said he was “completely comfortable” that the fees were worth it, given that after Qatar had just offered the bank a deal worth $250 million it was “now tapping into the core of their wealth.”
“We are, of course, guardians of the shareholders’s money,” Jenkins said. “We are not going to waste it, but we don’t exactly have a tremendous amount of leverage. We will fight for every penny of the shareholders’s money and not give it away as though it is water off a duck’s back.”
Brown asked Jenkins why these fees weren’t disclosed to other shareholders in the prospectus for the second capital raising.
“To imply that I’m in some way guilty for this document, I’m sorry, I find it very difficult to continue that conversation,” Jenkins said. “We have a board for this reason and I am not on that board. Sorry to be emotional about it.”
Brown said he will finish cross-examining Jenkins on Monday.
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