Barclays faces further blow to reputation amid warning bank could face criminal charges over 2008 bailout

 

Barclays is facing yet another blow to its already tarnished reputation after it emerged that the bank could face criminal charges over a 2008 bailout.

The bank – already facing opprobrium over the Libor rate-rigging scandal, the tax advice its gives clients, the PPI mis-selling scandal, executive pay and staff bonuses – is now being investigated about a £6 billion lifeline it received from foreign investors.

The money from the Arab state of Qatar enabled Barclays to avoid taking money from the UK government and retain its independence as a public company.

The ins and outs of that deal with the Qataris have been the subject of intense speculation in financial circles ever since.

Now it is alleged that Barclays lent money to Qatar so that it could invest it in Barclays.

This is a serious offence under the 2006 Companies Act and could result in criminal charges if the allegations turn out to be true.

While this specific matter does not come under the auspices of the Financial Services Authority, Barclays has already admitted last July that four of its current or former managers were being investigated by the FSA over payments linked to Qatar’s investment.

The FSA declined to comment on the latest developments. Barclays said: “Both the FSA and SFO investigations are ongoing and, as such, we are unable to comment further”.

City sources confirm that an investigation is ongoing but point out that this does not automatically indicate guilt.

The Serious Fraud Office and Qatar Holding declined to comment.

The deal with Qatar attracted controversy almost immediately. Existing shareholders complained that the Qatari’s were offered more attractive terms than were they.

The role of various fixers and corporate movers has been the subject of considerable speculation.

Barclays said last summer that fraud prosecutors had launched a criminal probe into payments between the bank and Qatar.

However, while it was known that Barclays was under scrutiny, the alleged loan to the Qataris represents a new element of the investigation. How much was allegedly loaned is unclear.

Barclays received cash injections in 2008 worth a total of £6.1 billion from Qatar Holding, which is a subsidiary of the Qatar Investment Authority, and Challenger, an investment vehicle of Sheikh Hamad bin Jassim bin Jabr al-Thani, the prime minister of Qatar and his family.

Qatar is not being accused of wrongdoing, it is understood.

Chris Lucas, Barclays’ chief financial officer, is known to be one of executives being investigated in connection with the capital raising.

Barclays was fined £290m last June by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.

The scandal sparked the resignations of three Barclays senior board members, including ex-chief executive Bob Diamond.

Barclays has also set aside £2bn to compensate customers for the mis-selling of payment protection insurance.

Last month, new chief executive Antony Jenkins ordered all Barclays staff to sign up to a new ethical code of conduct or quit.

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