Former Barclays CEO John Varley grilled on negotiations with Qatar in High Court

Private equity financier Amanda Staveley’s lawyers grilled former Barclays chief executive John Varley over his discussions with Qatari investors about fees during the bank’s emergency cash call in 2008.

The £1.5bn High Court case centres on Staveley’s claim that she got a worse deal than Barclays’ Qatari investors in the bank’s emergency cash call in 2008, at the height of the financial crisis.

Staveley’s private equity firm PCP Capital invested £3.25bn in the bank on behalf of Abu Dhabi’s Sheikh Mansour bin Zayed Al-Nahyan, while Qatar invested £2bn at the same time.

On the first day of Varley's testimony, PCP’s attorney Joe Smouha QC pressed him on the blue chip bank’s positioning as it entered into negotiations with the prime minister of Qatar, Sheikh Hamad Bin Jassim Al Thani, pointing out that, had the Qataris not invested, the alternative might have been for the bank to accept government money.

“We had a weak bargaining position, I accept that,” Varley told the court. Varley explained that he feared the consequences for the strategic direction of the bank had it become part-owned by the government and that it would have been “damaging” to shareholders.

Smouha combed through the negotiations, focusing on Qatar’s demand for £600m worth of fees for introducing investors in the October capital raising, much higher than Barclays’ initial offering of £120m.

Varley agreed that the negotiations between the bank and the Qatari investors could have been described as “tough” and that the investors had a “propensity to ratchet”.

When asked why he had told Financial Services Authority — now the Financial Conduct Authority — in 2012 that he didn’t recall the £600m demand, Varley said that he had “forgotten” about it at the time. The demand, however, is referenced in his witness statement.

Smouha also focused on whether or not there was a commercial and legal link between the June advisory services agreement with Qatar during the first capital raising in June 2008 and the October advisory services agreement later that year, when Abu Dhabi also invested, as represented by Staveley’s PCP.

Varley repeated that there was a “commercial connection but no interconditionality” — or legal connection — between the two agreements.

The former chief executive of Barclays from 2004 to 2010 was acquitted in June 2019 after an SFO fraud trial over payments made by the bank to secure investment from Qatar during the financial crisis.

Varley was also questioned on whether or not the bank had kept records of the profits and revenues to be gained from hiring Qatar as an adviser in June 2008. In his witness statement, the former banker explained that he had wanted to develop a “strategic relationship” with Qatar.

Smouha also quizzed the former banker on how much Roger Jenkins, the former executive chair of the investment bank, kept him up to date on the negotiations with the Qataris.

“We saw a lot of each other during this period,” Varley answered. “Roger gave me frequent updates.”

A portion of the evidence given by Varley was held in private.

On June 19, Staveley’s cross-examination ended on a tense note, with Onions accusing her of playing a role that amounted to a “hustle”.

The financier, who had been stoic throughout her six-day testimony, was reduced to tears as Onions’ accused her of suing the blue-chip bank because she thought it would “want to settle”.

The judge has also heard from Ali Jassim, who acted as an adviser to Sheikh Mansour, and Ramez Attieh, who worked at Deutsche Bank at the time the deal was made.

The case continues.