Linklaters declined Barclays role on 2008 Qatar loan over legality concerns, court filing claims
Credit crunch dispute over controversial capital raising turns spotlight on magic circle firm's role
August 21, 2017 at 07:09 AM
4 minute read
Linklaters refused to represent Barclays in connection with a controversial $3bn loan from Qatar at the height of the 2008 financial crisis amid concerns over its legality, papers filed at the High Court have claimed.
The claim is made in a filing by PCP Capital Partners, a private equity vehicle that had been working with Sheikh Mansour, a member of the ruling family of Abu Dhabi. In September 2008 Barclays had been looking to raise in excess of £6.5bn in capital and was in discussions with both PCP and Qatar Holding, then Barclays' largest shareholder.
According to documents filed this month in the Commercial Court in London, on 12 November 2008, Barclays' then-solicitors at Linklaters told Latham & Watkins, which was acting for the State of Qatar on the proposed loan, that "[so as to] seek to ensure that no financial assistance is being provided… the purpose clause should make it clear that the facility is being used for investments other than in Barclays".
The filing states: "The Qatar Facility Agreement did not include any such representation", and that "on the same day or the next, Linklaters declined to continue to act for Barclays in respect of the loan".
It continues: "It should be inferred that Linklaters resigned (at least in part) because it was concerned that the Qatar loan would be illegal, specifically that it would involve unlawful financial assistance by Barclays for the purchase of its own shares."
The claim cites an email dated 13 November 2008 between senior Barclays bankers Stephen Jones and Roger Jenkins, which says: "They have resigned on our loan to [Qatar], ostensibly on conflict grounds. Clearly very concerned about being [sic] to control where cash ends up."
PCP is claiming hundreds of millions in damages from Barclays with regards to false representations about the terms of the investment, claiming that its reliance on Barclays' representations meant that it missed out on hundreds of millions in potential fees or profits.
Allen & Overy took the lead role for PCP on the 2008 negotiations over the Saudi investment, while Clifford Chance acted for Barclays.
PCP is now being advised by City law firm Fladgate on the dispute, with partner Bree Taylor in the lead role. Simmons & Simmons is acting for Barclays.
The latest developments come after this June it was revealed that Barclays and four of its former executives are facing fraud charges over the 2008 Qatari loan.
The Serious Fraud Office announced that the bank and the four individuals had been charged with "conspiracy to commit fraud and the provision of unlawful financial assistance".
The four former executives are Roger Jenkins, who was the executive chairman of investment banking and investment management in the Middle East and North Africa for Barclays Capital, former Barclays chief executive John Varley, Barclays' former European financial institutions head Richard Boath and the former chief executive of Barclays Wealth and Investment Management Tom Kalaris.
Barclays is being advised by US firm Willkie Farr & Gallagher, while Varley has instructed City firm Corker Binning. Herbert Smith Freehills and Greenberg Traurig are acting for Jenkins, Boath is being represented by Peters & Peters and Kalaris by Steptoe & Johnson.
Three former senior in-house lawyers at Barclays also fell within the scope of the investigation, but have not been charged - former Barclays GC Mark Harding, who retired from the bank in 2013 after 10 years in the role; former corporate and investment banking GC Judith Shepherd, who left the bank in 2015; and former head of M&A legal Matthew Dobson, now general counsel for life capital at insurer Swiss Re.
Harding is being represented by BCL Burton Copeland business crime partner Richard Sallybanks, while Shepherd is being advised by Eversheds Sutherland corporate crime head Neill Blundell. Dobson is being represented by Winston & Strawn disputes partner Justin McClelland.
Linklaters declined to comment.
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