For Barclays Plc, the memories of the financial crisis and its rescue by Qatari investors just won’t go away.
When Barclays tried to avoid state bailout during the credit crunch more than a decade ago, it turned to private investors in the Middle East for funds. One of those was Qatar – which was subject to an eight-year investigation by the Serious Fraud Office and a pair of criminal trials.
But on the first day of a 1.6 billion pound ($2 billion) civil trial, lawyers for Amanda Staveley’s PCP Capital Partners focused on allegations that the bank loaned Qatar $3 billion in exchange for a life-line investment. Staveley claims the bank cheated her out of profits she says she should have earned by bringing investors into the 2008 deals.
PCP’s lawyer, Joe Smouha, tried to take the court back to the chaotic days of the financial crisis in 2008. He said the loan was concealed from the market and Barclays shareholders.
The Qataris, knowing they were one of Barclays last options at a desperately stressful time, “sought ever more onerous terms” in regards to the deal, Smouha said. “The Qataris asked for more and got and then asked for yet more and got.”
The hotly-anticipated civil trial, which was put on hold until after criminal proceedings -- which led to the acquittal of four bankers -- had concluded, is one of the final pieces of unfinished business from the 2008 crash. It will cover much of the same evidence as displayed in the criminal trial, but will also go further in revealing the inner-workings of a major bank during one of the most fraught times in banking history.
Barclays denies PCP’s claims and said the case is “misconceived and without merit in an emailed statement before the trial started.
Criminal charges against Barclays were dismissed by a court in 2018, including one offense of unlawful financial assistance in relation to the loan. The allegations were not discussed at the criminal trial.
PCP said that the $3 billion sum was almost exactly the same 2 billion-pound sum Qatar was offering to invest. Qatar didn’t specify a purpose for the loan and demanded it on an unsecured basis for a term of two years and prohibited Barclays from selling it down in the market.
“Barclays’ loan department was incredulous. Such a position “almost never exists, one member said,”’ Staveley’s firm said in written submissions.
Barclays told the court that the allegation is commercially irrational and “seems to be based on the false premise that Qatar could not otherwise afford to fund its subscription.
The trial is running for nine weeks, before breaking for the summer and returning for closing submissions in October. Due to the COVID-19 pandemic, lawyers are sitting two meters apart and the public and press can watch proceedings via a video link.