Barclays Bank accused of fraud over undisclosed loan to Qatar

September 04, 2016
A branch of Barclays Bank in London.

London - Barclays Bank has been accused of committing fraud in giving Qatar an undisclosed loan of $3 bil­lion in 2008.
The loan was used to buy shares in the bank, which needed the cash during the financial crisis eight years ago, the investment firm PCP Capital Partners alleged in a lawsuit filed September 1st against Barclays 1st at the High Court in London.
“Barclays’ October 2008 Capital Raising was a fraud on its share­holders perpetrated through a se­ries of unlawful transactions and dishonest conduct towards existing shareholders and prospective inves­tors,” PCP stated in the lawsuit.
“Contrary to the manner in which Barclays presented the Qatari par­ticipation in the October 2008 cap­ital-raising to the market, in fact the Qatari investors’ entire investment was funded by Barclays.”
PCP Capital Partners is an invest­ment firm founded by financier Amanda Staveley.
Staveley argued that Barclays did not award her Abu Dhabi investors the same terms for the raising of funds as the bank offered the Qa­taris. She is seeking more than $925 million in damages from Barclays for “failing to pay the same fees to her and her Abu Dhabi-based inves­tors that it agreed to [pay] to Qatar”, Sky News reported.
Staveley reportedly received about $53 million in commissions for her role in raising funds for Barclays.
PCP helped Barclays secure an investment of $4.6 billion from Sheikh Mansour bin Zayed al-Nahy­an, a member of Abu Dhabi’s royal family.
In addition to failing to disclose the loan, PCP alleged, Barclays also did not make public a $370 million payment to Qatar as fees for adviso­ry services. PCP argued that the fees Barclays paid to Qatar were not for advisory services but intended to recompense the Gulf state after the bank’s share price slumped.
Barclays denied the allegations, arguing that the fees paid to Qatar were unrelated to the investment.
The bank added that the services provided by the Qataris could not have been provided by PCP and its Abu Dhabi investors.
“We believe the claim against Barclays is misconceived and with­out merit and Barclays will be vigor­ously defending it,” the bank said in January.
If Barclays and PCP do not agree on a settlement, the case could go to trial next year.
Britain’s Financial Conduct Au­thority (FCA) had sought in 2013 to impose a $66 million fine on Barclays for allegedly breaching the rules related to the fees to Qatar but the bank disputed the penalty.
The bank is also under an inves­tigation by Britain’s Serious Fraud Office (SFO) over its emergency fun­draising from Qatar. The FCA case is on hold, pending the outcome of the SFO investigation, which is ex­pected to conclude by the end of the year.
The Qatari and Emirati invest­ments in Barclays in 2008 kept the bank from resorting to UK govern­ment aid, which would have been at the expense of British taxpayers.
It also would have meant that the British government would have in­fluence in the bank’s policies.
The British government had of­fered a $660 billion rescue package in response to the global financial crisis to restore confidence in banks and the financial market.