“JOHN VARLEY, ROGER JENKINS, THOMAS KALARIS AND RICHARD BOATH, between1 May 2008 and31 August 2008 , conspired together with Christopher Lucas , dishonestly to make representations within documents relating to Barclays’ capital raising of June 2008, with the intention of making gain for themselves or another, or causing loss to another, or exposing another to a risk of loss, which they knew were untrue or misleading, in breach ofsection 2 of the Fraud Act 2006 , namely: i. (In the Prospectus dated25 June 2008 ) that Qatar Holding was to be paid commission of 1.5% for its subscription in shares; ii. (In the Prospectus dated25 June 2008 ) that the aggregate costs and expenses payable by Barclays plc in connection with the Firm Placing and the Placing and Open Offer was estimated to amount to approximately£107 million ; and iii. (In Subscription Agreements dated25 June 2008 ) that Barclays had not agreed to, nor intended to pay, any additional fees, commissions, costs, reimbursements or other amounts to Qatar Holding.”
“JOHN VARLEY and ROGER JENKINS, between1 September 2008 and30 November 2008 , conspired together and with Christopher Lucas, dishonestly to make representations within documents relating to Barclays’ capital raising of October 2008, with the intention of making gain for themselves or another, or causing loss to another or exposing another to a risk of loss, which they knew were untrue or misleading, in breach ofsection 2 of the Fraud Act 2006 , namely: i. (In the RCI Prospectus dated25 November 2008 ) that Qatar Holding was to be paid commission of 2% for its subscription in RCIs and that the net proceeds of the issue of the RCIs was expected to amount to approximately£2,905,000,000 after deduction of commissions and concessions and the expenses incurred in connection with the issue of the RCIs; ii. (In the MCN Prospectus dated25 November 2008 ) that Qatar Holding was to be paid commission of 4% for its subscription in the Notes and that the net proceeds of the issue of the Notes was expected to amount to approximately£3,875,000,000 after deduction of commissions and concessions and the expenses incurred in connection with the issue of the Notes. iii. (In Subscription Agreements dated31 October 2008 ) that there were no further agreements or arrangements entered into between Qatar Holding and Barclays; and iv. (In Subscription Agreements dated31 October 2008 ) that Barclays had not agreed to, nor intended to pay, any additional fees, commissions, costs reimbursements or other amounts to Qatar Holding.”
“Fraud by false representation (1) A person is in breach of this section if he – (a) dishonestly makes a false representation, and (b) intends, by making the representation – (i) to make a gain for himself or another, or (ii) to cause loss to another or to expose another to a risk of loss. (2) A representation is false if – (a) it is untrue or misleading, and (b) the person making it knows that it is, or might be, untrue or misleading. (3) ‘Representation’ means any representation as to fact or law, including a representation as to the state of mind of – the person making the representation, or any other person. ….. (5) For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).”
“ (a) that the ruling was wrong in law, (b) that the ruling involved an error of law or principle, or (c) that the ruling was a ruling that it was not reasonable for the judge to have made.”
"When the judge has exercised his discretion or made his judgment for the purposes of and in the course of a criminal trial, the very fact that he has had carefully to balance conflicting considerations will almost inevitably mean that he might reasonably have reached a different, or the opposite conclusion to the one he did reach. Leave to appeal under section 67 of the 2003 Act will not be given by this court unless it is seriously arguable, not that the discretionary jurisdiction might have been exercised differently, but that it was unreasonable for it to have been exercised in the way that it was. No trial judge should exercise his discretion in a way which he personally believes may be unreasonable. That is not to say that he will necessarily find every such decision easy. But the mere fact that the judge could reasonably have reached the opposite conclusion to the one he reached, and that he acknowledges that there were valid arguments which might have caused him to do so, does not begin to provide a basis for a successful appeal, whether, as in the circumstances here, by the Prosecution or, when it arises, by the defendant."
"As we have said, this is an application by the Prosecution in which it seeks leave to appeal against a terminating ruling of the trial judge. The position of a trial judge …must be acknowledged and respected. That acknowledgement finds its expression in the principle that this court will not interfere with such a terminating ruling unless the conclusion of the judge, refusing to let the case go before the jury, is outwith the range of reasonable conclusions. That high hurdle, which a Prosecution must overcome is because this court is so much worse placed to make the sort of assessments and judgments this judge had to make when he was asked to stop the case against the defendants…"
“….Although the challenge for that jury in this case would be immense, and arguably at the very outer limit of the capacity of any jury, and my duty in fairly summing-up this case would be monumental, that is what the law requires….”
“The prospective investors identified – at a time when investors were difficult to attract because of the state of the banking sector – included (among others) the state of Qatar, in effect through its Sovereign Wealth Fund. In addition, the then Prime Minister of Qatar, Sheikh Hamad, was proposed as a potential investor through a BVI investment company called Challenger Universal Limited. I will, for convenience, call the various entities ‘the Qatari entities’, although I stress that they are legally distinct. RJ had a particularly close business connection with such entities.”
“…such commission was publicly set out in the Prospectus ultimately issued to shareholders and the wider market as 1.5%; the formal Subscription Agreements dated25 June 2008 also expressly stated that no other commissions were being paid to any of the investors. Further, in the Prospectus it was stated that the aggregate costs and expenses payable by Barclays in respect of the Placing was£107 million . (In the Prospectus, it may be added, it was stated that the Board and Barclays took responsibility for the accuracy of the information contained in it.) That figure was consistent with commission being paid to subscribers of 1.5% of their maximum investment commitment. It was not consistent with any further sum (by way of commission or otherwise) being paid to any such investors.”
“The structure of CR2 was particularly complex, involving the use of Reserve Capital Instruments, Mandatorily Convertible Notes and Warrants. Suffice it to say, Subscription Agreements and various Prospectuses were, with other documents, issued on 31 October and25 November 2008 . These contained in the relevant respects broadly the like statements and warranties as contained in the CR1 documentation. The public announcement of Barclays, and as restated in the relevant documentation, was that the Qatari entities would variously receive 2% commission on the Reserve Capital Instruments for which they subscribed and 4% commission on the Mandatorily Convertible Notes for which they subscribed (totalling£62 million ) and in addition an Arrangement Fee of£66 million . The stated net proceeds for Barclays were likewise calculated on such a basis.”
“…it being expressly stipulated that the loan could not be permitted for use to fund the CR2 subscription (because of an appreciation of the unlawful financial assistance provisions ofs.151 of the Companies Act 1985 ).”
“…in effect had to be paid as the Qatari entities (doubtless appreciating their strong bargaining position) were insistent….”
“Both agreements were in letter form. The stated term of ASA1 was 3 years. That of ASA2 was 5 years. ASA1 comprises one page. The stated sum to be paid (of£42 million ) for services to be provided is written in manuscript. That sum was to be paid in four instalments. The agreement does not specify the services to be provided in return for the£42 million ; it states that Qatar Holding has agreed to provide ‘various services, as an intermediary, in connection with the development of our business in the Middle East’; and that the ‘type and scale of the services …will need to be refined by mutual agreement as our relationship develops further’. ASA2 is hardly less short. The fee is stated at£280 million . It refers to the ‘great success of the agreement to date’. It then lists, in very broad language under six heads, the nature of some of the services stated to be provided: with again a statement that ‘these will need to be refined by mutual agreement’ during the period of the agreement. The sums payable by Barclays under ASA1 thus were£42 million . The sums payable under ASA2 were£280 million . It is one feature of ASA2 that its contractual period overlaps, for all but four months with the same contractual period stated in ASA1, albeit ASA2 was to last for an additional 28 months after ASA1 terminated. It is another feature of ASA1 that the four instalments payable under it were to be paid by1 April 2009 : that is, before the end of the contractual period; and all such instalments in fact were invoiced by the Qatari entities on13 August 2008 . The instalments payable under ASA2 were 20 equal instalments of£14 million .”
“…that would not only indicate Barclays’ weak position but also, in accordance with settled practice, all other subscribers in the same class should likewise also potentially have to be so paid a corresponding increased commission: and it was desired to avoid that.”
“…the question is, on the assumed facts, whether the alleged dishonest acts taken in conjunction with the alleged dishonest state of mind of the relevant individuals – in particular for present purposes JV, CL and RJ – can be attributed to Barclays so as to make it criminally liable. Put another way, are their (assumed) dishonest acts and intentions, for the purposes of these particular transactions, to be treated as the dishonest acts and intentions of Barclays itself?”
“….it is axiomatic that directors can be regarded as making statements within company prospectuses, and there are very strong public policy considerations to support that conclusion in order to give efficacy to the efforts of the common law and civil and criminal statutes to protect the wider market and safeguard the integrity of rights issues from false statements contained in public facing company documents….”
“1. I have read a proof of the Prospectus dated22 May 2008 (the final version of which is expected to be published on or around18 June 2008 ), and I understand that the Prospectus will constitute a prospectus prepared in accordance with the prospectus rules made under Part VI of ….[FSMA]…, as amended (‘FSMA’)(the ‘Prospectus Rules’). 2. I understand that the Prospectus is required by section 87A(2) FSMA to contain the information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the Company and of the rights attaching to the New Barclays Shares… 3. I understand that pursuant to Prospectus Rule 5.5.3R(2) I will be required to take responsibility for the Prospectus (and any supplementary prospectus) and that the Prospectus will contain a declaration in the following terms…. ‘The Barclays Directors, whose names appear at paragraph 2 below, and Barclays accept responsibility for the information contained in this document. To the best of the knowledge of the Barclays Directors and Barclays (who have taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.’ 4. To the best of my knowledge and belief (having taken all reasonable care to ensure that such is the case), all statements of fact in the prospectus relating to the Company and its subsidiary undertakings and all statements relating to myself are true and accurate in all material respects and are not misleading….. 6. There are no material facts or considerations omitted from the Prospectus which to my knowledge would make any statement in the Prospectus misleading and there is no other information known to me or which could on reasonable enquiry be known to me whose omission makes any statements or opinions in the Prospectus misleading. 7. I accept responsibility for the information contained in the Prospectus and confirm that to the best of my knowledge, having taken all reasonable care to ensure that such is the case, the information contained in it is in accordance with the facts and does not omit anything likely to affect the import of such information. 8. I hereby authorise the naming of myself as a director of the Company in the Prospectus and I authorise the issue and publication of the Prospectus….in the form in which it is approved for issue by resolution of the board of directors of the Company or a duly authorised committee of the board ….and in particular authorise the inclusion of a statement as to my responsibility as a director and I undertake to accept responsibility in the terms set out in the Approved Document. I understand that a responsibility statement is regarded as including expressions of opinion. This authority and undertaking is notwithstanding the fact that I may not attend the meeting of the board …., or the meeting of the committee of the board, which approves the final form of the relevant document or see the final form of any document approved in this manner prior to its publication or posting. 11. I have reviewed the memorandum prepared by Clifford Chance LLP entitled ‘Memorandum On Directors’ Responsibilities And Liability For Public Documents’ distributed at the board meeting on28 May 2008 …. 12. I will inform you immediately if I become aware, at any time before dealings begin in the New Barclays Shares on the London Stock Exchange: (a) that any statement of fact or expression of opinion contained in the Prospectus becomes or has become untrue or inaccurate; and (b) of any other fact, the omission of which renders any such statement or expression misleading.”
“1. Responsible Persons The Directors, whose names appear at paragraph 2 below, and Barclays accept responsibility for the information contained in this document. To the best of the knowledge of the Directors and Barclays (who have taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.”
“….that promoters of companies will not suppose that they can safely make inaccurate statements with no responsibility. I should much regret any such notion; for the general public is so at the mercy of company promoters, sometimes dishonest, sometimes over sanguine, that it requires all the protection that the law can give it….”
“Liability under FSMA is dependent upon the concept that the actus reus of making a statement in a document published by a company (such as a trading statement or prospectus) could be committed by a director of that company.”
“Criminal liability for the Prospectus may arise underFSMA, the Fraud Act 2006 , theTheft Act 1968 or the common law offence of conspiracy to defraud.”
“No one can escape liability for his fraud by saying: ‘I wish to make it clear that I am committing this fraud on behalf of someone else and I am not to be personally liable’.”
“….might also be liable for representations of third parties which he can be said unambiguously to have adopted…..”
“8. WARRANTIES AND BARCLAYS UNDERTAKINGS 8.1 Barclays hereby warrants to the Investor that each of the Warranties in Part A of Schedule 1 (Warranties) is true, accurate and not misleading as at the date hereof.”
“(B) Other than as disclosed in the Subscription Agreements and the Draft Prospectus, and in respect of the subscription of Barclays Ordinary Shares under the Subscription Agreements: (i) there are no further agreements or arrangements entered into between the Investors and Barclays; and, (ii) Barclays has not agreed to, nor intends to pay any fees, commissions, costs, reimbursements or other amounts to the Investors.”
“(1) ….if a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions… (a) will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement… ….. he is guilty of conspiracy to commit the offence or offences in question.” he is guilty of conspiracy to commit the offence or offences in question.”
“The directors of the Warrant Issuer (the ‘Directors’), whose names appear on pages 55 and 56 of this document, and the Warrant Issuer accept responsibility for the information contained in this Prospectus. To the best of the knowledge of the Directors and the Warrant Issuer (having taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.”
“For accounting purposes - ….the net proceeds of RCIs and Warrants of£2,905m (representing the£3,000m issuance, net of estimated issue costs of£95m )…. - ….the net proceeds of the MCNs of£3,875m (representing the£4,050m issuance, net of estimated issue costs of£175m )…”£175m )…”
“There is a further difficulty with the Warrants Prospectus in connection with Count 2. This is not so much procedural as substantive. The SFO’s reliance on the representations in the MCN and RCI Prospectuses creates no difficulty on the facts, and also recognises that it is the co-existence of the£280M with the statements made in them that engenders the falsity. The argument becomes strained and artificial in relation to statements made in the Warrants Prospectus because these were true even if the£280M is taken into account. The SFO relies on recondite statements in unaudited financial information referred to in the Warrants Prospectus which were introduced very late in the day. This was not new information. There is really no evidence that JV and CL applied their minds to this, either generally or in the context of the DRLs signed on 20th November. Although I have no difficulty with the submission that for the purposes ofs.5 of the Fraud Act 2006 specific intent can be proved by demonstrating that the directors must have appreciated that the extra£280M would falsify the MCN and RCI Prospectuses, I accept the defence submission that this becomes entirely artificial, indeed untenable, in relation to the Warrants Prospectus. This is a synthetic argument which aspires to transcend a legal difficulty. My January 2019 ruling was correct, although not given for all the right reasons, and I will not reverse it.”
“A person acts through an innocent agent when he intentionally causes the external elements of the offence to be committed by (or partly by) a person who is himself innocent of the offence charged by reason of lack of a required fault element, or lack of capacity.”
“Not only common law but statutory offences can be committed by proxy. When Fagin sends Twist to steal handkerchiefs, Fagin ‘appropriates’ a handkerchief, within the meaning of the Theft Act, at the moment when Twist takes it. If Dodge gets Dupe to write a false document, then if Dupe does not know of the falsity Dodge can be held responsible for ‘making’ a forgery by the hand of Dupe.”
“If D1 and D2 agree to employ an innocent agent, E, both D1 and D2 are liable as principal offenders for E’s acts when they are committed….. The innocent agent’s acts are considered the acts of both conspirators.”
“….s.2(2) has two elements: the representation as made must be untrue; the person making it must know that. The representation is not ‘false’ unless these two elements are in place.”
“A person is not guilty of committing an offence through an innocent agent when the law provides or implies that the offence can be committed only by one who complies with a particular description which does not apply to that person, or specifies the offence in terms implying personal conduct on the part of the offender. ”
“ It is contended…that the statute is not broken, because the person who made the entry did not know it was false, and the person who did know it was false did not make the entry. There is high authority that, where a man who knew of the falsity of the representation he was making made such representation by means of an agent who was ignorant of its falsity, there is no fraud…but that was in a civil action, and is, I believe a decision not universally approved of. This is clearly a false entry as far as Sheppard is concerned. It purports to represent receipts from the persons who have been entered as making payment of such receipts, and it seems to me clear that the prisoner either made it with the innocent hands of Elford, or concurred in the innocent hands of Elford making it. I am of opinion that this conviction was perfectly right, and must be upheld.”
“…to ensure that the scope of the criminal law of fraud is wide enough to enable fraudsters to be successfully prosecuted and appropriately sentenced, without being so wide as to impose unacceptable restrictions on personal freedom, or so vague as to infringe the principle of the rule of law.”
“Section 2 defines the elements that make up a false representation. By s.2(2) a statement that is literally true may be treated as false if it is misleading, although this is complicated by the introduction in s.2(2)(b) of what is in effect a mens rea requirement masquerading as part of the actus reus…..”
“The actus reus requires proof that D made a representation, which is untrue or misleading, and the mens rea requires proof that D knew the representation was, or knew that it might be, false and he acted dishonestly in making the representation, and with intent to gain or cause loss or expose to a risk of loss.”
“Whether, in these circumstances, the reasoning of the Court of Appeal remains a binding precedent may be a matter for debate. Whether it is or not, we endorse the court’s conclusion that an agreement to aid and abet an offence is not in law capable of constituting a criminal conspiracy under s.1(1) of the 1977 Act…”
“Fine roger. Thanks. When the dust settles let me know what I should do to thank him [Sheikh Hamad], and memorialise in some way our new partnership.”
“the extra arrangement with Qatar was not mentioned because the concept of the ASA had not been conceived. The problem was in the inbox and no solution had been found” [494]. (11) The Judge found that “the precise stage at which JV became aware of ASA1 as a concept is unclear”, but “the inference cannot reasonably and properly be drawn from all the circumstances that JV knew or believed that ASA1 was a sham arrangement” [495]. (12) JV had “next to no involvement in the development, negotiation or execution of ASA1” and there is “next to nothing” in the subsequent material “which could generate the inference that JV became aware that ASA1 was not as it purported to be” [496]. (13) ASA1 was approved by the Board and the BFC on19 June 2008 on the basis of “certain agreed fees” which were not spelt out. JV and CL led the meetings and “the inference must be that they were both aware that the agreed fees represented in arithmetical terms the difference between 1.5% and 3.25%” [498]. Legal advice was to the effect that the existence of ASA1 had to be disclosed in the Prospectus but not the level of the fee, because it was not a “material contract”
“….The fact in issue for the jury is always the following: was ASA1 a disguise for an additional fee for subscribing or was it the intention of the parties that genuine services would be provided? Proof of the mechanism, without more, does not prove that the parties did not intend that genuine services be provided. The parties could have reached an agreement to that very effect notwithstanding that all the various elements of the SFO’s case were satisfied. This is because RJ and Sheikh Hamad could lawfully have agreed that Qatar would provide services and be paid for them on the basis of the 1.75%....”
“The Proposal includes BB entering into an agreement with Q on an arm’s length basis pursuant to which the parties would agree to further their mutual business interests in a particular region. Instructing Solicitors’ view is that, provided the co-operation agreement is on normal commercial arm’s length terms and provides a bona fide corporate benefit to BB, it is irrelevant for the purposes of unlawful financial assistance or commissions. Does Counsel agree?”) (7) The Judge considered that the inclusion of a co-operation agreement in the proposal was likely to be because Clifford Chance had identified that “the whole of the additional value” sought by the Qatari entities could not be met through arrangement fees because of the 10% limit imposed unders.97 of the Companies Act 1985 . Mr Todd advised by telephone that the maximum amount that could be paid as an arrangement fee was£65m . There was evidence that MH (Barclays’ Group General Counsel) and Clifford Chance were discussing the issue on the basis of an advisory fee under the cooperation agreement in the region of£120m . At around the same time there was a telecon between MH and both JV and CL where it was said that any other payment to the Qatari entities would be for other commercial services and at market. The Judge observed that Clifford Chance understood the utility of such agreements because of their role in relation to ASA1 and from their perspective that utility was predicated on genuine services. Mr Todd’s advice was discussed internally [572]-[573]. (8) On the same day a spreadsheet was created and the Judge found that “it is probable that the spreadsheet was started before Mr Todd’s consultation finished”
“Counsel agreed that if there were any co-operation agreement between Q and BB on normal commercial arm’s length terms providing corporate benefit to BB this would not be problematic for the purposes of unlawful financial assistance or commissions.”
“From JV’s perspective..., the£125M fee in the advisory agreement…had been approved by the lawyers” [576], provided that genuine services were to be supplied. (13). On25 October 2008 , one of the lawyers’ “action points” was the fee letter for Qatar. “The lawyers were clearly involved in the genesis for ASA2” [573]. (14). On Sunday,26 October 2008 , there was an important Board meeting. (In the Minutes, Mr Agius was recorded as summarising “Recent Events” as follows: “The Board had encouraged management to seek a rapid solution to the capital raising requirements set by the FSA but recent market volatility had unnerved the strategic investors. Meetings with the bank CEOs and the government were making clear the strategic and operational constraints that the government would be imposing on those banks seeking government capital injections. With this background, management was working hard to achieve a transaction that made receipt of the capital certain and if possible allowed an announcement of all the parts of the capital raising package at the same time, whilst achieving the best deal possible for shareholders”). (15). (The Minutes then record JV explaining that it was proposed that the further capital be raised through the issue of£3 billion of RCIs with warrants attached and£3 -6 billion of Mandatory Convertible Loan Stocks (MCLS) with the Qatari and Abu Dhabi entities as major investors.) The Judge found that “the Board was told that the fees would be£135M in relation to Abu Dhabi, and “all Q =£250 ”. “All Q” clearly included£30 [M] + 40M +£65M =£135M . The difference between that and£250M is£115M .”
“Q fees – 2 unconnected forms of comp =£135M fee – also cooperative actions - pay them a further£115M for that reality - recognising we are paying fees in adv.”
“The£135M is the aggregate of£30M +£40M +£65M . The further£115M , described as referable to co-operative actions, is the difference between that and£250M . I am not sure that any other reasonable interpretation is possible.” [581]. (17). At that same meeting Mr Diamond told the Board the following about ASA2 [583]: “BD. Good example, an enormous piece of bus. Not signed up – need to get – no connection between the 2 – The unusual circ’s – we can say that – Need a further Board Meeting – People want another chew on it – session tomorrow night we should not seek a decision then + Decision on Timing …” (18). At the Board meeting on27 October 2008 , the minutes provided that, “It was noted that, under the current proposals, the Company would pay an arrangement fee to Quail and commitment fees to the MCLS placees … It was noted that these were considered to be legitimate costs in facilitating the capital raising and that they were on normal commercial, arm’s length terms.”
“the last week of October 2008 was desperate beyond measure, the threat was existential, JV was under intolerable pressure and Qatar was known to be extremely tough”
“The SFO relies on the ASA1 history against JV even if there is no case to answer against him on Count 1. I was not impressed by that: on this premise, JV’s knowledge of ASA1 is a factor which, if anything, can be deployed in his favour, because his assumption would have been that it was legitimate. The SFO has JS’s point about what further advice do we need, but there is no evidence that JV was aware of the nature of the “services”, if any, that had apparently been provided under ASA1.”
“606. Mr Agius’ moral outrage that JV did not discuss the£280M fee with him did not particularly impress me at the time. He could not have separated after-acquired knowledge from what he knew at the time. We now have convincing evidence that a nine-figure fee for advisory services was discussed at Board level, and Mr Agius has forgotten that. Mr Agius’ judgment that JV was a man of utmost integrity is also relevant here. JV’s ethics appear to have differed from others in bank. Mr Agius was not aware of the brevity of the timescales in the context of the opportunity he believes he should have been afforded. It is possible that the outrage would have been better directed elsewhere.”
“555. Additionally, it is a compelling feature of the evidence, or rather its absence, that there was no separate commercial negotiation between both parties about the advisory services that would be provided, putting to one side their value. This was all done through the lawyers. I have not been shown any proper instructions given to the lawyers from Barclays’ side.”
“….If JV had no real choice, and Qatar appreciated that, the possibility of dishonesty becomes more substantial. As the fee rocketed upwards, would a reasonable commercial man begin to believe that what was driving this was not genuine services but an unswerving and intractable desire to secure as much money as possible from an ailing British bank?”