I don't have any knowledge of UK financial laws but I don't really understand how getting foreign investors to buy stock in your bank constitutes fraud.

Now, of course, being a little cynical here, a lot of financial laws are intended more as a justification to allow the government to steal people's money as opposed to make any kind of rational legal sense. But even given that, I found the linked story to be unintelligible.

Generally speaking, at least the United States, fraud is when you trick somebody out of their money by reneging on a guarantee or implicit understanding. For fraud to exist, there must be a victim who is tricked. Who is that in the Barclay's case? The shareholders? I don't get that since the shareholders were not tricked. If a company does something that harms shareholders, that might be malfeasance, but it is not "fraud".

  • My guess (I am not a lawyer, and I'm not accusing anyone of anything) is that the SFO might regard "_ Barclays said it paid £322 million in “advisory services” to Qatari investors_" (from the 2nd paragraph) as potentially indicative of bribes having been paid.
    – TripeHound
    Jun 20 '17 at 13:25
  • @TripeHound A bribe is not fraud. Bribery and fraud are two different things. Also, bribing a Qatari official would be a crime in QATAR, not the United Kingdom.
    – Cicero
    Jun 20 '17 at 13:26
  • Edited to remove bribe=fraud. However, the SFO would probably investigate both. And -- although not a lawyer -- I was under the impression (from "policy documents" at companies where I've worked and elsewhere) that paying a bribe would be a crime in the UK (no matter where the recipient was), but I could be mistaken
    – TripeHound
    Jun 20 '17 at 13:30
  • This Wikipedia page includes "The Act has a near-universal jurisdiction, allowing for the prosecution of an individual or company with links to the United Kingdom, regardless of where the crime occurred" and also notes "local practises or customs should be disregarded when deciding this" (unless part of that country's written law).
    – TripeHound
    Jun 20 '17 at 13:42
  • Here is the SFO's own news release briefly explaining the charges, including citations of the relevant laws. In the US, it would be typical in such a case for the government to release the "criminal complaint", a court document explaining what the accused allegedly did, what law is violated, and how the alleged acts meet the legal definition of the crime. I am not sure if something similar would exist for the UK but I couldn't find it. Jun 20 '17 at 14:19

It is probably this provision of the Fraud Act that is alleged to be violated:

Fraud by failing to disclose information

A person is in breach of this section if he—

(a) dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and

(b) intends, by failing to disclose the information—

(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.

The fact that Barclay paid a substantial fee to (some of) the Qatar investors is something they are required to disclose - this probably won't be disputed. With respect to other investors, both the prospective new Qatar investors, existing shareholders and bondholders and prospective buyers of those securities, this failure to disclose this fact is probably something that would influence those people to invest or divest - if Barclay's are touting an investor who injected millions of pounds that Barclay gave him then that fact may (will) influence other investor's behaviour - this would need to be proved.


Source: http://www.legislation.gov.uk/ukpga/2006/35/section/2

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.

Also, from Nate Eldedge's link:

The Serious Fraud Office has today charged Barclays Plc and four individuals with conspiracy to commit fraud and the provision of unlawful financial assistance contrary to the Companies Act 1985. ...The defendants will appear before Westminster Magistrates’ Court at 14.00 on 3 July 2017.

So, I would surmise that a) Barclays (via its employees) are accused of having lied, presumably in some sort of disclosure, either to the government or to the shareholders, thus committing fraud as defined by the Fraud Act of 2006, quoted above, and b) more details of the accusations will be forthcoming at 2pm on July 3rd of this year.

Also, from my (completely fallible, US-based) understanding of the UK court system, while Magistrates' courts can hear less serious cases (i.e. driving infractions and misdemeanors), they also act as arraignment hearing bodies, before passing more serious cases to the Crown Court.

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