The UK's Serious Fraud Office has filed a case against four former Barclays employees.
The former head of Barclays Wealth and three former executives from the bank have been charged with fraud over the way it raised billions of pounds from Qatar at the peak of the financial tsunami.
The UK's Serious Fraud Office charged Tom Kalaris, an industry luminary who oversaw Barclays' wealth unit during the 2008 financial crisis; former chief executive John Varley; Roger Jenkins, who was executive chairman of investment banking and investment management EMEA at the time of the alleged offences; and Richard Boath, who was co-head of global finance in Europe and the Middle East.
The four and the bank are charged with conspiracy to defraud, false representation and unlawful representation following a five-year investigation into events surrounding the £11.8 billion ($14.89) emergency fundraising carried out by the bank in 2008.
The defendants and Barclays are due to appear at London's Westminster Magistrates' Court on 3 July.
If convicted, the offences carry a maximum prison sentence of ten years and a fine for the bank.
The SFO's case against them and the bank marks the first time the head of a global bank has faced criminal charges for activities during the crisis era, a time when large lenders across the UK, US and Europe were bailed out by taxpayers.
But a regulatory lawyer, who asked not to be named, told this publication that the "basis for charging was not clear".
In June and October of 2008, Qatari investors poured a total of £6.1 billion into Barclays, which allowed it to remain independent of the UK government while Royal Bank of Scotland and Lloyds Banking Group were forced to take taxpayers' cash.
When the two investments were made, Barclays executives promised to pay Qatari investors £322 million for helping the bank bolster its business in the Gulf. And in November 2008, Barclays agreed to loan $3 billion to the state of Qatar.
The SFO said in a statement: “The charges relate to Barclays Plc’s capital raising arrangements with Qatar Holding LLC and Challenger Universal Ltd, which took place in June and October 2008, and a $3 billion loan facility made available to the State of Qatar acting through the Ministry of Economy and Finance in November 2008.”
Kalaris, 61, shared a close relationship with former Barlcays CEO Bob Diamond and headed the bank's wealth management division during the financial crisis.
He joined the bank in 1996 after spending 18 years at Wall Street giant JP Morgan carrying out a number of roles, including head of fixed income sales, trading and research.
In late 2005, Kalaris was shifted by Diamond to lead Barclays' wealth operation after serving as head of distribution and research at Barclays Capital, its investment banking division.
The move was part of Diamond's aim to bolster Barclays' private banking operations overseas.
Kalaris pushed to move the medium-sized unit up the ranks to become a global player in wealth management and to boost cross-selling with the investment bank.
He launched Project Gamma in 2009 in a bid to increase client assets to as much as £300 billion and return on equity to between 17 and 18 per cent by the end of 2013.
Kalaris left the bank in the summer of 2013. He stepped back into the wealth management ring last summer when he launched UK-based boutique Saranac Partners.
The firm declined to comment.
Kalaris could not be reached for comment, but his lawyer reportedly declined to comment, according to the Financial Times.
In a statement published on its website, Barclays said: “The charges arise in the context of Barclays' capital raisings in June and November 2008. Barclays awaits further details of the charges from the SFO. The SFO has informed Barclays that it has not made a decision as to whether it will also bring charges against Barclays Bank PLC in respect of the loan.
“Barclays is considering its position in relation to these developments.”
UK Regulator Steps In
The side deals with investors from the royal families of both Qatar and Abu Dhabi also sparked a probe from the UK's regulator, the Financial Conduct Authority, which has examined whether Barclays properly disclosed fees it paid to Qatar, and if it secretly loaned money to the state for it to be reinvested in the bank.
The FCA said in an emailed statement: "We are pleased that this matter, which led to the stay of our own case, is now in the public domain. We welcome a fair and transparent hearing on the basis of the charges set out today by the SFO. We work closely with the SFO across a range of matters, in pursuit of our distinct objectives.”
Boath claimed he was unfairly dismissed by Barclays when the SFO shared the transcript of his interview with the bank.
He will reportedly “contest the charges vigorously”.