A £1.5bn civil case against Barclays began in the High Court today, centring around the bank’s scramble to raise capital at the height of the 2008 financial crisis.
A private equity firm which set up a Middle Eastern investment deal in 2008 is suing Barclays for alleged deceit. PCP Capital Partners claims Barclays misrepresented a separate deal it had struck with Qatari investors, preventing the equity firm from obtaining ‘vastly better’ terms. The bank denies wrongdoing.
For PCP, Joe Smouha QC of Essex Court Chambers told the court that Barclays had concealed a $3bn loan to Qatar and almost £350m worth of fees, in exchange for emergency investment. PCP had allegedly been assured that Qatar was ‘getting the same deal’ that it was.
Smouha said: ‘If the false representations had not been made, PCP would have obtained vastly better terms from Barclays… Barclays was in a worse bargaining position, and it was determined to not take the government's bail-out which had been announced at that time and which was taken up by other banks.’
PCP attacked the argument that because a large number of Barclays staff were involved in the 2008 transactions that fraud could not have taken place. ‘It is a much more nuanced than… saying you have to find some grand conspiracy with everyone involved in some smoky room’, Smouha said.
‘That is a monolithic submission that is entirely divorced from the human reality of differences of knowledge; differences of level of seniority; of hierarchy; of function and role; of the human nature of employees in large organisations to resist pressure from above; and divorced from the reality of what is, and what isn’t, put in written communications in large organisations.’
He added: 'These differences are particularly important in this case precisely because it is a claim based on specific misrepresentations by individuals to individuals.'
In February, a jury acquitted three Barclays’ executives of fraud following a seven-year investigation and prosecution by the Serious Fraud Office. The civil case, which is expected to last for nine weeks, continues.
PCP is represented by Quinn Emanuel Urquhart & Sullivan.