A high-profile banker responsible for the Qatar-backed bailout of UK lender Barclays claimed in court on Monday that his moral compass would not have allowed a deal involving ‘unacceptable’ methods.
Roger Jenkins, 64, the Middle East investment chief for Barclays and the bank’s ‘gatekeeper’ to the ruling family, is accused with two colleagues of fraud over payments of £322 million to Qatar to secure billions to prevent a taxpayer-funded bailout during the 2008 global financial crisis.
The prosecution claims that the bank agreed a secret deal to pay Qatar higher rates of commission than other investors in the face of tough bargaining by then prime minister Sheikh Hamad bin Jassim Al Thani. They say other international investors, including from the UAE, were kept in the dark.
Senior officials had previously mulled a legally-contentious scheme, which did not go ahead, to pay higher-than-usual interest on Qatari deposits to try to give them the money they demanded.
“I know that certain things are not acceptable – deposits at very high rates, strange options structures,” said Mr Jenkins. “I’m a very experienced banker. I have a moral compass.”
Qatar eventually invested £4 billion in the bank, part of an £11.2 billion fundraising that secured the bank’s future in private hands.
Other British lenders such as a Lloyds and the Royal Bank of Scotland were forced to rely on government-backed bailouts.
The trial has heard that the bank’s senior executives were desperate to avoid a similar fate, in part because it would affect multi-million pound pay deals.
But the bank was concerned that if it was seen to be paying Qatar higher commission payments would expose its weak financial position and other lenders would demand the same terms, the court has heard.
Prosecutors claim they came up with the bogus advisory agreements which allowed the bank to make the payments but disguise them as payments for additional services.
Mr Jenkins said he “jumped at the opportunity” and saw the agreement as a potentially profitable strategy that would see Qatar introduce potential Middle East investors and taking part in joint investments, the court heard.
If the agreement “had been honest and such a good advantage to yourself and Barclays, you would have landed on it straight away,” said Ed Brown, counsel for the Serious Fraud Office, during cross-examination. “If it was honest, why didn’t it occur to you?”
Mr Jenkins said it might be because he was “clearly not that clever.” Mr Brown replied that the jury might disagree with him, given that he is “extremely sharp.”
The strategy of paying Qatar what it wanted sparked concerns at the top of the organisation. Another of the men on trial, Richard Boath, told a colleague in a recorded telephone call: “Nobody wants to wear the problem, I certainly don’t.”
Mr Jenkins told the court that lawyers had pored over the detail of the deals to ensure they remained on the right side of the law.
“I don’t think anyone on this case is under the illusion that what we are dealing with here is a fine line,” Mr Jenkins told the court. One group of lawyers expressed concerns it would be seen as a “disguised commission”, he said.
The court heard of two weeks of frantic activity at the bank while Mr Jenkins shuttled between London, Doha, Dubai and Johannesburg while senior officials sought a solution to securing Qatari cash.
During the last days before an eventual deal was struck, Mr Jenkins said he travelled from Qatar to Dubai before returning for a meeting with Sheikh Hamad to make it appear as if he was busier and had more offers on the table than the bank really had.
Mr Jenkins and his colleagues Tom Kalaris, 63, and Richard Boath, 60, all deny fraud.
