The City watchdog will fine Barclays £50m for failing to disclose hundreds of millions of pounds of fees paid to Qatari companies during an emergency fundraising campaign during the financial crisis.
The high-street lender tried to avoid a taxpayer bailout in 2008 and so it reached out to overseas investors, including Qatari ones.
According to the Financial Conduct Authority (FCA), Qatari funds that agreed to participate in the fundraisings later received advisory fees. Barclays struck two agreements totalling £322m.
However, the regulator stated that these figures were based on Qatari “demands” and not the actual value of the advice.
According to the company, the payments were twice the size of the June capital raising disclosures and three times the size of the October disclosures.
Barclays failed to disclose the role that payments played in the decision of Qatari funds not to participate in the fundraising.
Barclays is being fined for “grave deceit,” according to the High Court. The High Court ruled last year that Barclays treated Amanda Staveley, an investor, as she tried to secure support from Abu Dhabi investors.
The judge also criticized the bank for trying to discredit Ms Staveley, calling her a lightweight “chancer” who was involved in a “hustle”, in order to get in on the deal.
Ms Staveley stated that she feels vindicated and is appealing for damages.
On Friday, the FCA stated that “The FCA considers it to have been highly relevant information for shareholders, investors, and the wider market, particularly in October 2008 in circumstances where the disclosed cost was already perceived as very expensive.”
Mark Steward, the FCA’s executive director for enforcement and market supervision, said: “At October 2008’s height of the financial crisis, Barclays paid hundreds of millions of pounds in fees to a certain Qatari investor so they could contribute new capital.
“Barclays didn’t inform shareholders and the market about these matters as required.
“Barclays’ inability to disclose these matters was reckless, and it lacked integrity. This follows an earlier failure by Barclays to disclose fees paid to Qatari investors on June 2008.
“There was no valid reason or excuse to not disclose these matters. There is no basis for it being done because of the financial crisis.
Financial markets are always dependent on transparency, particularly in times of market stress or market volatility.
The Upper Tribunal will now consider the FCA’s findings.
Barclays spokesperson said that the bank had referred the findings from the Regulatory Decisions committee to the Upper Tribunal for reconsideration.
The FCA has stayed proceedings while the Serious Fraud Office files charges against three Barclays bankers for the fundraising.
The three men were all acquitted by the FCA in February 2020. This leaves the FCA’s possible fine as the final action in relation to the deal.
Qatar Investment Authority still owns a stake in Barclays. It stated that it was a “committed shareholder and investor” and would continue to do so in 2020. However, the Authority has not been investigated or accused of any wrongdoing.
