Barclays' Jenkins Refused to Take Fall for Varley, Official Said

(Bloomberg) -- Ex-Barclays Plc Middle East head Roger Jenkins said he wasn't willing to take the fall for then-Chief Executive Officer John Varley when he found out that a side-deal with Qatar could cause problems, another former official at the bank told investigators.

The tension among Barclays executives now caught up in a landmark London fraud trial was disclosed in the interview one of the defendants, Richard Boath, gave to investigators at Serious Fraud Office in 2014. During the questioning, Boath recalled his conversations with Jenkins, who was considering how to channel money that Qatar sought before it would invest in the bank at the height of the 2008 financial crisis.

The money, however, was more than double what other investors were receiving during the fundraising and Jenkins asked Boath to find the best way to pay the fees.

The 322 million pounds ($426 million) in fees ensured that Qatar would make an investment of 4 billion pounds -- which allowed Barclays to avoid nationalization. Now, in the first U.K. trial of any top banker connected to the financial crisis, Varley, Jenkins, Boath, and former Barclays wealth management boss Tom Kalaris are accused of dishonestly hiding the fees from other investors, who weren't getting the same deal. They deny any wrongdoing.

After consulting with a member of his team, Boath told Jenkins that Barclays could either give Qatar free advice on mergers and acquisitions, lower-than-usual fees to issue bonds or an advisory agreement, which meant that the Gulf nation would need to deliver genuine services to the bank, Boath said, according to extracts from his SFO interviews that were played to a London jury on Monday.

Qatari officials were happy to go ahead with an advisory deal as a way of receiving the fees, Boath recalled Jenkins as saying. While Boath said the idea had actually come from someone on his own team, he still had reservations about the plan.

Hang on, Roger

"I said, ‘Hang on, Roger,'” Boath told the investigators in the 2014 interviews. “We can't do a transaction in which we give one set of fees to the market or to one set of economics for one group of investors and we have a different set of economics for another set of invests, because if they found out they'll go completely nuts. You can't do that. We can't do that.' I was quite vigorous, because I felt it quite strongly."

Jenkins then agreed that it wasn't worth the risk, Boath told the SFO.

“‘Well f--k that,'" Jenkins replied, according to Boath's interview with the investigators. Boath said neither of them felt it was worth doing the deal just to protect Varley and ex-investment bank head Bob Diamond, who may have lost their jobs if the bank was nationalized.

“I'm not taking a hit to save John and Bob's job,” Boath recalled Jenkins saying. “F--k that.”

Diamond isn't accused of wrongdoing.

After the two escalated the matter, Barclays' then General Counsel Mark Harding signed off on the arrangement as long as the bank received sufficient value from the advisory deal, Boath said. Because senior figures like Varley, then-Chief Financial Officer Chris Lucas, the bank's top legal officials, including Harding's deputy Judith Shepherd, and its external lawyers at Clifford Chance had all agreed to the arrangement, Boath was happy for it to go ahead, he told the investigators.

“Very clear legal instruction was given," Boath said. "And it was repeated, repeatedly, throughout the transaction in conversations that I had with people in group legal. I'd been told that Mark Harding was all over it. Judith Shepherd is now all over it. I can relax."

The SFO has identified Lucas as a co-conspirator, but he is too ill to stand trial. Harding, Shepherd and other lawyers involved have not been accused of wrongdoing.

To contact the reporter on this story: Franz Wild in London at fwild@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, James Hertling

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