Consortium Against Terrorist Finance Dec. 2, 2015, 10:00am

Elephants never forget, but we cannot say as much for Barclays who, for the third time in 7 years, find themselves awash in public controversy over suspicious business dealings with Qatar - what investors term the “Elephant Deal.” Barclays first caught the attention of the Serious Fraud Office (SFO), the Financial Conduct Authority (FCA), and the U.S. Justice Department and Securities and Exchange Commission in 2008, at the height of the financial crisis, after receiving £5.3bn from Qatar Holdings LLC. In an effort to avoid government subsidies, Barclays commissioned investors for £11.8bn (over a two year period) without informing them that the deal included paying Qatar Holdings £322m over five years. Based on this 2008 ongoing investigation, Barclays is charged with breaching disclosure rules for U.K.-listed companies and failing to act with integrity toward its shareholders. 

Then, again in 2011, Barclays attracted the attention of SFO and the FCA over a £1.9 bn secret transaction with Qatar over the bank’s failure to conduct, “due skill, care and diligence.” In their haste to rush through the landmark deal, Barclays ignored legal procedure established by Britain’s anti-money-laundering rules. In addition, details of the transaction were kept in a safe rather than on a computer, making it difficult for the FCA to have immediate access to the requested information. The name of the Qatari individual(s) banking with Barkley’s continues to be protected by the FCA except to say that they are “politically exposed persons (PEP).” And confidentiality clause of £37.7m assures that the names will not be released in the near future. However, given the PEP status of the Qatari client, and the higher risk of financial crime associated with such classifications, Barclays’s failure to attend to proper procedure is especially reckless.

On November 26, 2015 the FCA issued a thirty-seven page report in which it fined Barclays £72m for, among other infringements, failure of the manager to oversee “Barclays’ handling of the financial crime risks,” failure to “corroborate the Clients’ stated source of wealth and source of funds for the Transaction,” and failure “to mitigate the risk to society of financial crime.” Given that Barclays has a history of questionable behavior in their financial dealings with Qatar; given that Barclays is currently being sued for transferring millions of dollars for Iran, long suspected of funding and training terrorists; and given the risk that these transactions pose to not only the banking industry but also to society at large, does the punishment fit the crime? Is a £72m fine on a £1.9bn deal an appropriate fine? Or is Barclays just shelling out peanuts?

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