Barclays finance chief investigated by FSA over fundraising

In wake of Libor scandal, Chris Lucas is under FSA spotlight over £7.3bn funds raised from Middle East investors in 2008

Barclays was engulfed by a fresh crisis on Friday when it admitted that its finance director, Chris Lucas, is under investigation by the Financial Services Authority (FSA) in relation to funds raised in 2008.

The latest potential run-in with the regulators comes as the bank scrambles to pick up the pieces over the Libor rate-fixing scandal, which has already led to the resignations of four top directors at the bank.

As it announced £759m in pre-tax profits, down 71% from £2.6bn last year, the bank suggested that the FSA was investigating whether all the fees had been disclosed in two fundraisings that took place to help the bank avoid a bailout by the taxpayer. Barclays sources insisted that it did not involve payments to any current or former staff.

The FSA had "commenced an investigation involving Barclays and four current and former senior employees, including Chris Lucas", the bank said.

"The FSA is investigating the sufficiency of disclosure in relation to fees payable under certain commercial agreements and whether these may have related to Barclays capital raisings in June and November 2008. Barclays considers that it satisfied its disclosure obligations and confirms that it will co-operate fully with the FSA's investigation."

In a terse conference call with journalists – the bank avoided face-to-face encounters, citing transport difficulties in London as a result of the Olympics – the bank's chairman, Marcus Agius, refused to provide more details, cutting off questions with a curt "enough".

Despite the focus on the new FSA investigation, Barclays shares were the biggest risers in the FTSE 100 as the City welcomed the news that its "adjusted" profit before tax of £4.3bn, which was up 13% and stripped out a credit charge on its own debt of £2.9bn, had beaten expectations.

Ian Gordon, a bank analyst at Investec, said: "This is one in the eye today for Barclays' many enemies and detractors."

Agius once again apologised for the Libor scandal, which has left the bank facing a £290m fine and braced for a wave of litigation that took up an entire page of disclosure in the half-year results. Barclays also admitted that it was taking a provision of £450m for the interest rate swap products that were sold to small businesses but are now being investigated by the FSA.

The FSA's investigators are focusing on a fundraising in June 2008, when the bank raised £4.5bn through an issue of new shares, and a second fundraising, in November 2008, when it raised more than £7bn from largely Middle Eastern investors. It is understood that the key paragraphs being scrutinised by the FSA were in documents linked to the June 2008 fundraising, which cited "an agreement for provision of advisory services" by Qatar Investment Authority to Barclays in the Middle East and "to have agreed to explore opportunities for a co-operative business relationship" with Sumitomo Mitsui Banking Corporation.

Another paragraph says: "Barclays and Qatar Holding have entered into an agreement for the provision of advisory services by Qatar Holding to Barclays in the Middle East." The total fees disclosed were about £100m.

In the separate November 2008 fundraising, it provided five separate disclosures of fees that amounted in total to around £300m.

Agius resigned in the wake of the Libor scandal, but was temporarily reinstated when chief executive Bob Diamond was forced out by regulators. Agius had been expected to appoint the new chief executive, but said that his successor would be named before Diamond's replacement.

Agius refused to let Lucas respond to questions about whether he had offered to resign over the Libor scandal.

"We are sorry for the issues that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders. I speak for all of Barclays people when I say how determined we are to regain the full confidence of all our stakeholders – customers and clients, investors, regulators and staff alike," Agius said.

Agius's departure will follow that of Diamond, the chief operating officer, Jerry del Missier, who has received a near-£9m cash payoff, and the non-executive director Alison Carnwath, who resigned earlier this week. Agius refused to comment on Del Missier's payoff.

The investigation into the way fees were disclosed by Barclays during its fundraising in 2008 started in the last few weeks and is thought to be many months from completion.

By announcing Chris Lucas as one of "four current and former senior employees" being investigated by the Financial Services Authority, the bank is ensuring that as much information as possible about its dealings with regulators has been made public after its fine for attempting to manipulate interest rates. It is not known who the other three are. In 2008 the fundraising was crucial in ensuring Barclays was able to avoid a taxpayer bailout.

Roger Jenkins, the high profile banker who left Barclays in 2009, was credited with playing a key role in introducing the Qatar investors to the fundraising. He worked with John Varley, who was the then chief executive of Barclays, in putting together the complex but crucial fundraising.

A row was sparked with shareholders who were not offered the chance to buy new shares being issued through what are known as pre-emption rights – and hence risked diluting their influence over the company.

Contributor

Jill Treanor, City editor

The GuardianTramp

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