A Barclays Fraud Would’ve Cost Jenkins $64 Million Bonuses

Bookmark

(Bloomberg) -- Former Barclays Plc executive Roger Jenkins would’ve lost about 50 million pounds ($64 million) in bonuses if he conspired to hide payments to Qatar at the height of the 2008 financial crisis from investors, his lawyer told a London jury.

Jenkins negotiated a deal for Barclays to pay Qatar 322 million pounds in fees to help the bank become the wealthy Gulf nation’s partner of choice and not as a sweetener to help bail the lender out, John Kelsey-Fry said in court on Thursday. Any hint of wrongdoing would have jeopardized Jenkins’s status at the bank, which could have cost him millions when he left the lender.

Jenkins, the bank’s former Middle East investment banking chief, and two other executives, Tom Kalaris and Richard Boath, are accused of illegally hiding the fees from other investors. Prosecutors at the Serious Fraud Office allege that the payments were an inducement for Qatar to invest 4 billion pounds in the bank and save it from a looming U.K. bailout.

All three men have pleaded not guilty. Defense lawyers are beginning their opening statements Thursday after more than a week of prosecution arguments.

Kelsey-Fry said Jenkins’s priority was to secure a role for Barclays as Qatar’s preferred partner. To do so, he needed to fend off rival banks, Credit Suisse Group AG and Goldman Sachs Group Inc., which were already working with the Gulf nation.

Since getting to know the Qatar’s “enormously powerful” prime minister, Sheikh Hamad bin Jassim al Thani in 2007, Jenkins had worked hard to develop a relationship with him and offer him wide-ranging banking services, Kelsey-Fry said. While Credit Suisse had traditionally been Qatar’s first choice for banking, the country had also initially asked Goldman Sachs to advise on an $8 billion oil deal, before giving it to Barclays instead, Kelsey-Fry said.

“He had befriended him and earned his trust, upon which everything depends in the Middle East,” the attorney said. “For many years, Qatar had favored, in fact, Credit Suisse. Roger Jenkins had been actively trying to turn Sheikh Hamad’s head towards himself and Barclays so that Barclays could benefit from such favor.”

Qatar made two investments in the bank in June and October 2008, and in turn, Barclays agreed to pay the fees to the Gulf state for its advisory services in the region. SFO prosecutors allege the advisory payments were really secret sweeteners for Qatar.

Had Jenkins engaged in fraud, he would’ve been considered a “bad leaver” when he departed the bank, which would’ve him cost him 50 million pounds in benefits, Kelsey-Fry said. Jenkins not advocating for a genuine advisory relationship, Kelsey-Fry said, would’ve been “insanity.”

The SFO’s allegations about the agreements being a sham defies logic, considering that Qatar was a valuable partner and Barclays made its money back from the relationship almost immediately, Kelsey-Fry said. He said the prosecution had been confused by the reams of emails and recorded phone calls relating to the advisory agreements, 95% of which, he said, didn’t address what was at issue.

On top of that, Kelsey-Fry argued, the arrangements were approved by a myriad of officials inside and outside the bank.

“The lawyers, the board and others were very closely involved in its creation and sanctioning,” Kelsey-Fry said. “All of whom were of course well aware of the existence of” the advisory agreement.

Ian Winter, a lawyer for Kalaris, echoed those arguments, saying that the board, lawyers and other executives including Bob Diamond, who isn’t accused of any wrongdoing, were aware of all the details.

The prosecution had drawn “perverse” conclusions from the phone calls between the defendants, Winter told the jury. One call, in particular, shows that Kalaris would have been happy to sign up to the advisory deal, even if Qatar hadn’t been investing in Barclays itself, Winter said.

“How could anyone who knew it was a fraud and a shame have possibly uttered those words?” Winter asked.

©2019 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.