Barclays faces reinstatement of fraud charges over £12bn fundraising

Barclays faces a fresh legal battle with the UK's Serious Fraud Office (SFO) after the agency said on Tuesday that it planned to reinstate criminal charges against the bank that were dropped earlier this year.

The SFO had brought criminal charges against Barclays over its 2008 emergency fundraising from Qatar but a judge at Southwark crown court dismissed the case in what was seen as a significant victory for the British bank.

The anti-fraud agency has now made an application to the high court seeking to reinstate all the charges against Barclays plc and Barclays Bank. The lender said on Tuesday that it planned to defend itself against the SFO application, which is expected to be heard in the high court later this year.

The SFO charges had centred around an allegation that the bank gave unlawful assistance to Qatar through a $3 billion loan to directly or indirectly acquire shares in a fundraising. The bank was able to avoid a state bailout during the 2008 financial crisis.

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The agency brought charges against Barclays plc, the bank’s holding company, of conspiring with former executives to commit fraud by false representations over two advisory agreements signed with Qatar Holding in 2008. It also brought charges of unlawful financial assistance – the practice of companies lending money to fund the purchase of their own shares – against both Barclays plc and Barclays Bank plc, one of its main operating subsidiaries. These were the first criminal charges to be brought against a bank for its alleged actions during the 2008 financial crisis.

Reinstate

The SFO said in a statement on Tuesday that it had made an application to the British high court on July 23rd to reinstate all the charges dismissed by the judge at Southwark Crown Court in May.

The agency’s move is not wholly unexpected. Barclays had said in May it believed that the SFO was “likely to seek to reinstate these charges by applying to a high court judge to recommence proceedings via a new indictment of the same charges”.

The Barclays investigation is one of the SFO’s most high-profile probes and comes as the agency faces questions about its future direction under its new director Lisa Osofsky who starts later this year. There has been speculation that the government might want to fold the SFO into the National Crime Agency.

Four former executives at Barclays, including ex-chief executive John Varley, still face criminal charges over the cash injections the bank arranged from Qatari investors. They are due to stand trial in January.

Attempt failed

It is rare for a prosecuting agency to try to reinstate criminal charges when they have been dismissed by the crown court. In 2015, the SFO tried to reinstate charges against two former directors of a Welsh mining company in the high court using a voluntary Bill of indictment but this attempt failed and the case came to an end.

The further legal battle comes as Barclays seeks to draw a line under some of the litigation and regulatory probes it is facing. In March, Barclays agreed to pay $2 billion to settle US claims it had mis-sold residential mortgage-backed securities before the financial crisis. That represented a victory for Barclays, which had refused to settle in 2016 alongside two European rivals that were fined significantly more.

In May, Jes Staley, the bank's chief executive, survived an investigation by the UK's two financial regulators into his attempt to unmask the identity of a whistleblower in 2016. – Copyright The Financial Times Limited 2018