Barclays fraud allegations – what happens next?

It’s difficult to overstate the significance of the Serious Fraud Office’s charges against Barclays PLC and the four senior Barclays bankers- including John Varley, its former boss and one of the most high profile names in the City.

It’s a day most people thought would never come. The first time criminal charges have been brought against a bank or senior banking executives in relation to wrongdoing at the height of the financial crisis.

The SFO investigation relates to Barclays fundraising in 2008 when the credit crunch was in full swing and there were rumours circulating about the health of multiple financial institutions, but in particular RBS and Barclays.

RBS was famously bailed out by the Government, but Barclays resisted a bail out.

Instead it sought financing from Middle Eastern investors, in particular from the sovereign wealth fund and ruling family of Qatar.

And it’s that deal with Qatar that’s been under the SFO microscope for the past five years.

The allegation is that Barclays in 2008 made a series of payments to Qatar – known as agency service agreements – to incentivise them to buy Barclays shares and so help bolster the bank’s financial position. And – crucially – that some of those payments were not properly disclosed by Barclays at the time.

Barclays has consistently denied any allegations of wrongdoing and today said it awaited further details of the SFO charges.

But even the scant details we have today are damning enough. Two counts of fraud by misrepresentation and one charge of unlawful financial assistance.

That the charges have been levelled against a number of individuals is also very serious, because it denotes – as it says on the tin- a conspiracy to commit fraud which is very different from one bad banker who went rogue.

And because the SFO has named certain individuals in charge of the bank, it means the agency was also able to name Barclays Plc, the corporation, on the charge sheet too.

So what happens next? Well, a hearing has been set for Westminster Magistrates Court for July 3. Here Mr Varley and his fellow bankers could turn up and enter guilty pleas, in which case a sentencing hearing would then be scheduled. The maximum for this type of fraud is a 10 year jail term but a judge could take into consideration the guilty pleas and any arguments and/or mitigating circumstances.

Or the bankers could decide to fight. Certainly that seems to be the case for Roger Jenkins who today said through his lawyer in New York that he would rigorously defend the claims.

If that happens then the case would proceed to trial and we would, ten years on from the credit crisis, have the spectacle of some of Britain’s highest paid bankers – those at the very centre of the financial crisis – finally having their day in court.

Safe to say that would be one packed courtroom.