After reviewing Barclays Bank’s reaction to the 2008 financial crisis the Serious Fraud Office has charged the bank and four former directors with fraud-related offences.

When the bank was in real trouble and was attempting to avoid a taxpayer bailout, billions of pounds were raised from Qatari investors but it is alleged that the way that this was carried out contravened the law. In particular there was one payment to a holding company for ‘advisory services’ though this has been suggested to be, in reality, a sweetener for the deal. Furthermore there was also a loan of £2 billion that helped the Qataris pay for the shares in Barclays. In other words the bank was essentially funding itself.

With this in mind it is worth looking at the specific charges brought by the Serious Fraud Office.

Firstly we have fraud by false representation contrary to ss. 1 and 2 of the Fraud Act 2006. For more details on this it is worth looking at the video I put together going over the Fraud Act 2006.

In relation to the loan there is also a charge of unlawful financial assistance that would be a breach of s. 151 of the Companies Act 1985. Today the offence is covered in the more recent Companies Act 2006 but the relevant provision was not in force in 2008 and so the charge falls under the older legislation that sets out the offence in a very clear fashion:

Subject to the following provisions of this Chapter, where a person is acquiring or is proposing to acquire shares in a company, it is not lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place.

After a wide-ranging and in-depth investigation by the SFO it would be unusual for Barclays to plead innocent to the charges and will instead take the fine as a means to avoid paying extended legal costs, a larger fine and also to negate the effect of any bad publicity so that they can carry on business-as-usual.

In the case of the former directors who are charged it is more likely that they will defend themselves as the penalty not only includes a fine but also the possibility for imprisonment as well.

However one of the mroe controversial takes on the case comes from looking at the larger picture. Remember that the reason Barclays did what it did was to avoid a potential government bailout. In the end it is not beyond the realms of possibility that their actions saved the taxpayers in the UK a huge amount of money.

Of course justice is blind and any wrongful action should be punished in accordance with the law so that others are discouraged from similar activities.