Abu Dhabi, UAESaturday 4 April 2020

Barclays trial: Executive’s wooing of ex-Qatar PM led to bank rescue

How Barclays Bank tapped Qatar’s wealth in 2008 and sparked an eight-year fraud probe

The beauty of the Costa Smeralda has drawn the rich and wealthy to Sardinia. Getty
The beauty of the Costa Smeralda has drawn the rich and wealthy to Sardinia. Getty

Even by the exotic standards of Italy’s Costa Smerelda where playboy millionaires party with film stars by the sparkling azure waters, there was little to match the raw economic power of two men sitting down for dinner on board one luxury yacht.

The guest list for the July 2007 gathering on the northern coast of Sardinia included Roger Jenkins, one of Britain’s best-paid bankers, and Sheikh Hamad bin Jabar Al Thani, then the prime minister, foreign minister and head of Qatar’s sovereign wealth fund.

By one account, the two men had been brought together through the friendship between their wives. Another suggested the dinner followed a chance meeting with the Tunisian socialite Afef Jnifen, a friend of the Qatari leader, on the white sands of the north Sardinian resort where they had all been on holiday.

After dinner, the two men chatted and swapped notes about investments in British-based supermarket chains. But for Mr Jenkins, it was just the start of a process of wooing the man holding the purse-strings to the Qatari gas and oil fortune.

What Mr Jenkins did not foresee was that the convivial meeting on the yacht would land him 12 years later in a London criminal court to join a group of the most senior bankers to be prosecuted over the fallout from the 2008 financial crisis. He was acquitted on Friday.

By the time of the meeting, Mr Jenkins was already a big-noise at Barclays, known for his ferocious work-ethic and 90-hour working weeks while jetting between his home in Malibu, California, the Gulf, London and South Africa.

The fiercely intelligent former international athlete had run the bank’s tax division and was on course for a £36 million bonus that year. He was also one half of a power-couple, his Bosnian wife Diana, was an indefatigable figure on the charity fund-raising circuit who would become known for events at which famous figures would be tapped for cash.

But now Mr Jenkins faced the tough challenge of securing Qatari funds that would be desperately needed as the world was about to lurch into a financial crisis.

The first indications of just how bad it would get came the following month in August when banks stopped doing business with each other when the huge scale of the subprime mortgage sector crisis became clear.

It would take a year before the financial crisis came to a head when Lehman Brothers went bankrupt in September 2008.

UK regulators demanded banks increase their levels of capital and Barclays had already identified Middle East sovereign wealth funds as potential sources of investment. Their efforts had made little headway, opening up rivalries in the senior team.

Bob Diamond, the charismatic head of the bank’s investment banking division and later chief executive, had unsuccessfully tried to secure regional backers.

Mr Jenkins thought that he was going about it the wrong way, the court heard. Mr Jenkins would later tell colleagues that he played the long game with Sheikh Hamad in attempt to secure funds from the sovereign wealth fund of about $300 billion.

A jury cleared former Barclays Middle East investment chief Roger Jenkins. Getty
A jury cleared former Barclays Middle East investment chief Roger Jenkins. Getty

The men followed their initial dinner date with further meetings in Cannes in the south of France, in Doha and in California. Mr Jenkins claimed the pair became close friends, often meeting with their wives and with Sheikh Hamad’s son, Sheikh Jassim.

During the meeting in California, Sheikh Hamad confided in Mr Jenkins that he had received numerous approaches from banks and would soon finalise plans to take advantage of the weakness in the sector. “He wants to be our special Gulf guy,” Mr Jenkins told colleagues in an email.

At the start of the discussions with Qatar, Barclays felt its hand was strong.

Chief Executive John Varley warned against giving Qatar the impression a deal would prop up the bank, pointing out “the losers” such as investment bank Bear Stearns went bust during the financial crisis.

“We have been a winner in the turmoil and we have no need of a prop up,” Mr Varley wrote to Mr Jenkins. “So everything we do with them needs to reflect… that fact.”

Mr Varley had sought to change the direction of the banking group so that three-quarters of its profit and income came from sources outside of the UK.

Former chief executive of Barclays John Varley was cleared of criminal charges in 2019. Getty Images
Former chief executive of Barclays John Varley was cleared of criminal charges in 2019. Getty Images

He had looked enviously towards the Gulf since late 2007 where some rival banks had secured considerable returns, unlike his own.

Mr Jenkins had told him that Sheikh Hamad, who headed the sovereign wealth fund in addition to his role as prime minster, was willing to invest in Barclays. But the Qataris were known to be tough negotiators.

Over three days in May, Mr Varley joined Sheikh Hamad for discussions and dinners at Mr Jenkins’ £5 million home in west London to lay down the basis for their future co-operation and then met again at the Four Seasons Hotel in London’s Park Lane.

But 11 days later, in a meeting at the Qatari-controlled Claridges hotel in central London with a group of senior executives, the Qataris dramatically upped their demands for investing billions in the bank.

They wanted a commission of 3.75 per cent, more than double what the bank was proposing to pay other investors such as the China Development Bank, Singapore’s sovereign wealth fund and Japanese corporation Sumitomo.

They finally settled on 3.25 per cent and the bankers wrestled with the problem of how to pay the Qataris what they wanted. “They’ve got us by the balls,” one executive fretted.

By November 2008, the bank secured more than £11 billion from investors – with Qatar the largest investor with £4 billion. During the talks, Mr Jenkins had suffered a heart attack but returned swiftly to help seal the deal.

The highest ranks at Barclays were delighted.

In the afterglow of the deal, the chief executive John Varley wrote to Mr Jenkins and called him a “magician”.

Mr Jenkins highlighted his role and that of his wife Diana in internal emails in the securing of two rounds of raising capital for the bank in June and November, 2008.

“Let’s be clear about the truth,” Mr Jenkins wrote in an email to a fellow executive just 24 hours after the deal was finally concluded. “This relationship and indeed all good deep trusting relationships don’t start out as transaction pitches.

“Diana teed up Hamad thru his wife that’s how it began. His wife wanted to be [in] Diana’s circle. I then took great pains to keep it social and advisory for many months for no fees etc.

“We Diana and I built great trust.

“Only on such a foundation could I ever have achieved what we have achieved so if anyone is pissy on this I’d like to know…. So a little credit to the architect.”

The board recommended him for a £25 million bonus.

And then it turned sour.

As the markets calmed after the worst of the financial turmoil, questions over the fund-raising led Britain’s financial watchdog to conclude that Barclays had “acted recklessly” over its failure to disclose key details and fined the lender £50 million. The bank is challenging the finding.

It tipped off the Serious Fraud Office (SFO) in 2012, which started its own criminal inquiry.

It resulted in the bank, Mr Varley and the three executives all being charged. The bank mounted a vigorous defence and refused to hand over documents until it was threatened with being raided.

The SFO wrote to the Qataris but never got anything useful from the state’s officials. A judge later criticised the SFO for failing to take all necessary steps to gather documents from the lawyers of the Qatari investors.

The biggest blow for the investigators came when the criminal case against the institution was thrown out before it came to trial.

But they pressed ahead with prosecuting individual directors, even though finance director, Chris Lucas, who had Parkinson’s disease, was deemed too ill to stand trial.

Former Barclays chief financial officer Chris Lucas. Micha Theiner/Cityam/Shutterstock
Former Barclays chief financial officer Chris Lucas. Micha Theiner/Cityam/Shutterstock

There were further delays when a judge ruled there was insufficient evidence to proceed against Mr Varley.

The case started in late 2019 with just three executives in the dock. More than 12 years after dinner party on the Mediterranean that started the ball rolling to the capital raising, the jury delivered its verdicts.

Updated: February 28, 2020 08:50 PM

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