Ex-Barclays chief John Varley withdrew from the battle to clear the bank’s name

John Varley is about to be dragged into yet another British courtroom, where the former Barclays CEO will appear as the key witness in the bank’s challenge to a £50 million fine over an emergency fundraising from Qatari investors at the height of the financial crisis.

The case at the Upper Tribunal in London, which begins on Monday, is the latest episode in a legal saga that has swung back and forth for more than a decade, with the reputation of one of Britain’s biggest banks and its top financial watchdogs of the country has been endangered. the balance.

Varley, an archetypal city banker known for his signature red suspenders and tailored suits, told the court at a pre-trial hearing that “it never occurred to me” that he could be called again to testify about the events that have taken place. 16 years ago.

The case focuses on the desperate measures Barclays took to avoid being bailed out by the British government – ​​as several of its British rivals did – when the financial system collapsed following the collapse of Lehman Brothers in 2008.

The events in question prompted both criminal and regulatory investigations and two failed prosecutions. Varley faced the infamy of being the first CEO of a major bank to appear before a jury over the events of the financial crisis, but was ultimately acquitted and charges against Barclays itself were dropped before trial. The case has contributed to a review of corporate criminal liability in Britain.

The FCA alleges the bank breached UK listing rules by failing to disclose that it paid higher fees to Qatari investors than to those from other countries, including China, Singapore and Abu Dhabi, when it sold £11,000,000 in two share sales in 2008. raised 8 billion.

The main controversy stems from £322 million in undisclosed fees that Barclays paid to a Qatari sovereign wealth fund in return for the investment of more than £4 billion. The FCA said the fees “would have had a material impact on the terms of the capital increase” had they been made public.

When the FCA announced in 2022 that it would impose a £50m fine on Barclays, the watchdog said Barclays and one of its senior managers – whom Varley was believed to be referring to himself according to a previous court ruling – had “acted recklessly” by investors to mislead. Barclays has denied all allegations and challenged the FCA’s decision.

The stakes are high for Barclays, Varley and the FCA. If the bank’s challenge is successful, the bank and its former boss will be able to declare victory in their decade-long battle to defend their reputation against accusations that they broke the rules to escape a British taxpayer bailout.

For the FCA, the lawsuit represents a final opportunity to successfully punish a major bank for misconduct in the chaotic months following the 2008 financial crisis.

Many feel that the case has gone on for far too long. “It is time to impose strict deadlines and timescales on the regulators themselves to ensure the regulatory outcomes are achieved before everyone forgets what it was originally about,” said Harvey Knight, partner at City law firm Withers.

In an unusual twist, it was Barclays itself who called Varley as a witness as part of its ultimately failed legal Catch-22 argument in an attempt to get the case dismissed.

The bank said the court should refuse its request to subpoena Varley because it was unfair to require the former CEO, who is now 68, to testify when the FCA already said he should be “definitive” after he was acquitted in the previous criminal case. which had caused him a lot of stress.

Barclays suggested that the entire case against the bank should be dismissed as a fair trial could not be conducted without Varley’s testimony.

However, this was rejected by the court. The judges conceded that subpoenaing Varley, who was CEO of Barclays from 2004 until his resignation in late 2010, would “provoke a further period of media attention and mental strain” and acknowledged that “there may be limits to what Varley probably can. to remember” about events that took place 16 years ago.

But they said he “would be an important witness and could provide evidence of significant value in support of Barclays’ case”, adding that the argument against his appearance “does not rest on any physical or mental ill-health caused by these events. or is likely to be caused by having to give evidence”.

However, for those seeking to pin misconduct on Barclays for its actions during the financial crisis, the past decade has been littered with setbacks – most notably the two failed prosecutions by the Serious Fraud Office of the bank and four of its executives, including Varley.

The bank was also acquitted in a separate civil lawsuit brought by Amanda Staveley’s PCP, who was involved in the disputed capital increase and claimed deception by the bank left it out of pocket. In that case, the judge found Barclays “guilty of serious deception” but ruled that PCP had failed to demonstrate that it would have found the necessary debt financing to close a deal. Staveley and Barclays are currently in arbitration in a parallel case.

Once the criminal trials concluded, the FCA was able to resume its enforcement actions against the bank. It planned to also fine Varley £1 million and ban him from working in a regulated financial services role.

While upholding the substance of the allegations against him, the watchdog decided to halt the action on the basis of ‘general fairness’, taking into account the personal costs and disruption the former Barclays boss had already suffered.

The judges said earlier this year that they had “no reason to doubt that the proceedings over the past 12 years have been all-consuming for Varley and have placed a heavy burden on himself and his family.” period of stress”.

The trial will last three weeks and the ruling can be appealed. Lawyers for Barclays, Varley and the FCA all declined to comment.

Additional reporting by Alistair Gray in London