14:06, July 02 131 0 theguardian.com

2020-07-02 14:06:03
Barclays: Qataris spoke to Gordon Brown to 'defuse 2008 bailout pressure'

A Qatari leader spoke to then prime minister Gordon Brown during the 2008 financial crisis as Barclays came under increasing pressure to accept government money, a former bank boss has told a high court judge.

Former Barclays chief executive John Varley told Mr Justice Waksman how Qatari prime minister Sheikh Hamad spoke to Brown in October 2008 to “defuse” that pressure.

Varley said Sheikh Hamad “sought reassurance” from Brown that Qatar’s interest in Barclays would not be “forcibly diluted” by mandatory government investment.

He said he did not want Barclays to go into government ownership and told the judge about a “bleak” meeting with then- chancellor Alistair Darling.

Varley was giving evidence at a high court trial in London on Thursday after Barclays became embroiled in a £1.6bn battle with a businesswoman.

Amanda Staveley has made complaints about the behaviour of Barclays bosses when negotiating investment deals during the 2008 financial crisis.

She says Barclays agreed to provide an unsecured £2bn loan to Qatari investors.

But she says that loan was “concealed” from the market, shareholders and from PCP Capital Partners, a private equity firm she runs.

PCP is suing the bank and wants £1.6bn in damages.

Staveley, who in recent months has been involved in brokering a deal which could see a Saudi consortium take control of Newcastle United, says PCP introduced Manchester City owner Sheikh Mansour to Barclays and he “subscribed” to invest £3.25bn.

She says PCP is owed money for the work it did.

Barclays disputes PCP’s claim and says it is made “of sand”.

Varley told Mr Justice Waksman how Barclays had a “strengthening relationship” with Qatar in the autumn of 2008.

“I recall that Sheikh Hamad had sought reassurance from the UK prime minister, Gordon Brown, that Qatar’s interest in Barclays would not be forcibly diluted by mandatory government investment,” said Varley in a written witness statement.

“The bank came under increasing pressure to accept the government’s money as October progressed, and I recall that Sheikh Hamad also spoke with Gordon Brown and other ministers to defuse this pressure.”

He added: “I regarded this as an extraordinary demonstration of the strengthening relationship between the bank and Qatar.”

Varley, Barclays chief executive between late 2004 and late 2010, said he “feared for the consequences” of the “strategic direction” if Barclays became part-owned by the government.

He said he thought that government ownership would be “very damaging” to the interests of shareholders.

Government ownership would have probably put jobs at risk and affected the bank’s ability to pay bonuses to employees, he said.

Varley said that would have damaged the retention and recruitment of staff. He told how he and other bank chief executives had met Darling in October 2008. “The meeting was bleak,” he said.

“One look at Fred Goodwin, CEO of RBS, and at Andy Hornby, CEO of HBOS, told me that the days of independence for their banks were over.”

He added: “The realisation of that was very alarming.”

The judge has heard that Barclays entered into an “advisory services agreement” with Qatar.

Varley said there had been a “desirability” to enter into a “strategic partnership” with Qatar.

He said he viewed that agreement as “consistent with that objective” and it was “not a sham”.

He said Sheikh Mansour had the characteristics Barclays was looking for in an “anchor investor candidate”.

But he said neither PCP nor Staveley themselves would have satisfied Barclays’ “criteria”.

“I understand that Ms Staveley claims that PCP also represented other potential investors, and that PCP considered itself a potential investor in the bank,” he said.

“I have no recollection of any person – including Ms Staveley – indicating to me at any time that PCP was itself a potential principal, nor that it was representing anyone other than Sheikh Mansour or his interests.”

He said the idea that PCP itself would be an investor in “capital raising” would not have “held any attraction”.

Mr Justice Waksman, who began overseeing the trial on 8 June, has already heard evidence from Staveley and witnesses called by PCP.

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