Jeremy Warner: Those Barclays arrangement fees

Outlook In the past, I've made myself unpopular with some readers, as well as with the OECD, by seeming to apologise for British Aerospace in connection with the Al-Yamamah bribes for arms contract. But can someone please explain to me the difference between what BAE did and the multimillion-pound arrangement fees the Gulf states are paying themselves and their advisers for investing in Barclays? OK, so one is deemed illegal while the other is apparently accepted practice in the capital markets. Yet in concept the two seem almost identical. Both involve "commissions" to those who arranged the deal. BAE was selling arms, Barclays is selling capital, but almost any transaction when involving the Middle East seemed to require a little something to oil the cogs.

In the Barclays case, there cannot be any corruption involved, as the Gulf states are in effect paying the commissions with their own money. Yet that was the same with the Al-Yamamah contract too. Indeed the Barclays case may in some respects be thought worse, as the payment of fees to feather the nests of various middlemen further dilutes existing shareholders. But then that's the way of the world, isn't it? The UK Treasury, which seems not to be charging any arrangement fees for the money it is providing to recapitalise other UK banks, may have a thing or two to learn from the potentates of the Gulf.