London: UK fraud prosecutors may open a criminal probe as soon as this week into payments Barclays made in 2008 to Qatar’s sovereign wealth fund as the bank sought to raise money, according to two people familiar with the case.
The Serious Fraud Office, which prosecutes bribery and white collar crime, may inform the London-based bank about its decision on a probe this week, according to the people, who declined to be identified because the discussions are private. Prosecutors are working with the UK Financial Services Authority, Britain’s finance regulator, which is conducting a civil investigation into whether the bank adequately disclosed fees it agreed to pay the Qatar Investment Authority.
The investigation would be another legal pitfall for Britain’s second-biggest lender by assets after it paid US and UK authorities a record £290 million (Dh1.68 billion) in June for manipulating the London interbank offered rate, or Libor, and related interest benchmarks. Regulators and prosecutors are still investigating former Barclays employees in the Libor case.
SFO spokesman David Jones, Barclays spokesman John McGuinness and a spokesman for the QIA declined to comment.
Barclays disclosed the FSA probe into the payments last month and said that four current and former senior employees, including Finance Director Chris Lucas, were being investigated by the regulator.
Barclays raised £7 billion of capital from investors including the Abu Dhabi and Qatar sovereign wealth funds after the financial crisis began in 2007. The move allowed the bank to avoid a government bailout, unlike Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.
“The FSA is investigating the sufficiency of disclosure in relation to fees payable under certain commercial agreements and whether these may have related to Barclays capital raisings in June and November 2008,” the lender said in a statement on July 27.
On the same day, Barclays Chairman Marcus Agius said on a call with journalists that Lucas’s name was deliberately disclosed by the bank as the information was potentially market-moving, and that investigations such as this occur “routinely.” He said the board retained “full confidence” in Lucas.
“The bank entered into an agreement for the provision of advisory services by Qatar Investment Authority to Barclays in the Middle East,” the lender said in a June 2008 statement detailing the fundraising. The FSA is reviewing whether that disclosure was adequate, said the person, who declined to be identified because the terms of the investigation are private.
The US Securities and Exchange Commission opened a broad investigation in January 2011 involving several financial firms to determine whether they made improper payments to secure investments from sovereign wealth funds, four people familiar with the matter said at the time. That probe focuses in part on whether banks, hedge funds and private-equity firms paid placement agents to win access to the state-owned money.