BusinessDay 07 Jan 2019
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Monday <strong>07</strong> <strong>Jan</strong>uary <strong>2019</strong> www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng<br />
@ FINANCIAL TIMES LIMITED<br />
Former Barclays executives<br />
prepare to face fraud trial<br />
John Varley, former chief, and 3 others pursued in SFO prosecution<br />
Caroline Binham<br />
The UK Serious Fraud Office has<br />
made a last-minute personnel<br />
change to ensure its flagship<br />
case against four former Barclays top<br />
brass is properly overseen as one of<br />
the biggest tests in its 30-year history<br />
comes to trial.<br />
Barclays’ former chief executive,<br />
John Varley, is one of four defendants<br />
whose long-anticipated trial begins<br />
this week. They face charges over<br />
the bank’s emergency refinancing<br />
arrangements with Qatar in 2008, as<br />
Barclays struggled to avoid the fate of<br />
other high-street rivals bailed out by<br />
the UK taxpayer.<br />
It is the first jury trial in the world<br />
of a major bank’s chief executive over<br />
actions taken during the financial<br />
crisis more than a decade ago and<br />
is scheduled to take at least four<br />
months at London’s Southwark<br />
Crown Court.<br />
The question of who at the SFO is<br />
accountable for the case has been in<br />
doubt since its general counsel quit<br />
for a law firm. The stakes for the SFO,<br />
which has spent millions of pounds<br />
in ringfenced money from the Treasury<br />
investigating the case over more<br />
than six years, are high after bloody<br />
noses in other trials recently, including<br />
the collapse of the retrial of two<br />
former Tesco executives late last year.<br />
SFO charges against Barclays<br />
itself and its operating subsidiary<br />
over the Qatari arrangements were<br />
also scrubbed in October, sparing the<br />
bank from trial.<br />
The anti-fraud agency has now<br />
named Mark Thompson, its chief<br />
operating officer, as the official accountable<br />
for the case.<br />
The agency’s director, Lisa Osofsky,<br />
had to recuse herself from the<br />
Barclays case following her arrival at<br />
the SFO in late August from private<br />
practice, where she was a monitor<br />
to banks trying to overhaul their<br />
compliance.<br />
Alun Milford, the SFO’s former<br />
general counsel who had taken the<br />
Neil Hume<br />
Investors are warming to gold<br />
as markets are whipsawed by<br />
concerns about slowing global<br />
growth.<br />
As US equities tumbled in<br />
December, the holdings of goldbacked<br />
exchange traded funds<br />
rose by 2.25m ounces, according<br />
to Scotiabank, helping to drive<br />
the price of the metal to six-month<br />
highs of more than $1,290 a troy<br />
ounce.<br />
That forced funds that had<br />
placed speculative wagers against<br />
gold in the US futures market to<br />
cover their positions, sending the<br />
market from a net short to a net<br />
long position — where bullish wagers<br />
outnumber bearish bets — for<br />
the first time since June last year.<br />
Analysts believe there has been<br />
a further increase in bullish bets as<br />
well as short covering, although<br />
this has yet to be reflected in official<br />
data. Weekly reports compiled<br />
by the US Commodity Futures<br />
Trading Commission are not being<br />
published because of the partial<br />
government shutdown.<br />
COMPANIES & MARKETS<br />
lead role in the case, has recently left<br />
for Kingsley Napley, the law firm.<br />
While the firm’s instruction precedes<br />
his arrival by many months and he<br />
will not be involved, Kingsley Napley<br />
has a role acting for some of the witnesses<br />
in the case.<br />
Mr Thompson is viewed as a safe<br />
pair of hands at the agency and also<br />
stood in as acting director after the<br />
previous director, Sir David Green,<br />
left in April and before Ms Osofsky<br />
took up the role.<br />
But while Mr Thompson is an<br />
experienced investigator, he is an<br />
accountant by background and not<br />
a lawyer.<br />
The SFO has shrugged off concerns<br />
that there is no senior lawyer<br />
acting as a “second pair of eyes” as<br />
the landmark case proceeds to trial.<br />
Mr Thompson is expected to<br />
make any decisions in conjunction<br />
with Hannah von Dadelszen, a<br />
senior lawyer who jointly heads its<br />
fraud team, while the case controller,<br />
Rakesh Somaia, has been in place<br />
throughout the probe.<br />
The agency declined to comment.<br />
After six years and interviews with<br />
at least 40 individuals, the case is<br />
finally heading to trial.<br />
As well as Mr Varley, in the dock at<br />
Southwark Crown Court will be Roger<br />
Jenkins, the rainmaker who negotiated<br />
the two 2008 capital raisings; Tom<br />
Kalaris, who was a trusted lieutenant<br />
in Barclays’ investment banking unit,<br />
and Richard Boath, the former European<br />
head of the investment bank’s<br />
financial institutions group.<br />
The case involves issues over what<br />
the bankers told the market when Barclays<br />
twice turned to Middle Eastern<br />
investors in 2008 as part of emergency<br />
cash calls worth £11.8bn at the height<br />
of the financial crisis.<br />
Qatari investors ploughed a total<br />
of £6.1bn into Barclays over the two<br />
capital raisings. The SFO alleges that<br />
the bankers induced the Qataris to<br />
invest through side deals worth more<br />
than £300m not fully disclosed to the<br />
market nor to other investors.<br />
Gold lures investors as gyrating markets take shine off stocks<br />
An eruption of volatility has seen the metal re-establish its haven status<br />
“A combination of rising open<br />
interest on Comex and the gold<br />
price going up tells me that new<br />
longs are coming into the market,”<br />
said John Reade, chief market<br />
strategist at the World Gold<br />
Council.<br />
For much of 2018 gold was out<br />
of favour, hit by the strength of the<br />
dollar and interest rate rises in the<br />
US, which dented the appeal of<br />
assets such as the precious metal<br />
that offer no yield. That saw gold<br />
trade as low as $1,174 in August in<br />
spite of rising geopolitical tensions<br />
and the fallout from US-China<br />
trade war.<br />
Sentiment towards gold began<br />
to improve towards the end of the<br />
year as US stock markets fell and<br />
volatility increased. That has continued<br />
into <strong>2019</strong> amid speculation<br />
a slowing US economy will ultimately<br />
force the Federal Reserve<br />
to stop raising interest rates.<br />
Analysts say gold can continue<br />
to shine as long as markets remain<br />
volatile — a fact underlined late<br />
last week after a better than expected<br />
US jobs report saw equity<br />
markets bounce.<br />
FINANCIAL TIMES<br />
John Varley, Barclays’ former chief executive, is one of four defendants facing charges over the bank’s emergency refinancing arrangements<br />
with Qatar in 2008 © Getty<br />
RBS admits misleading court to repossess customer’s home<br />
Case highlights concerns that banks are struggling to change scandal-hit culture<br />
Nicholas Megaw<br />
Lawyers representing Royal<br />
Bank of Scotland falsely denied<br />
the existence of a customer<br />
complaint in a court hearing to repossess<br />
a borrower’s home.<br />
The case will fuel concerns that<br />
banks continue to mistreat customers<br />
despite claiming to have transformed<br />
their culture after a series<br />
of scandals.<br />
Richard, a longtime RBS customer<br />
who did not wish to give his<br />
full name, initially fell into arrears<br />
on a NatWest-branded mortgage<br />
when the bank paid some property<br />
management fees levied by a third<br />
party that he thought were unfair.<br />
He complained about his treatment<br />
to the Financial Ombudsman<br />
Service in May. However the bank<br />
initiated court proceedings to repossess<br />
the property in June, and<br />
its lawyers said on August 15 that<br />
it had “no knowledge” of any FOS<br />
complaint, according to a witness<br />
statement prepared for the hearing.<br />
“Consequently, the claimant<br />
[RBS] asks that the court will refuse<br />
the defendant’s request to dismiss<br />
[or] adjourn the hearing”, added the<br />
lawyers.<br />
Airbus faces a test of its credibility<br />
this week when it reveals whether<br />
it met its target to deliver around<br />
800 aircraft last year, as the plane maker<br />
races to narrow an orders gap with archrival<br />
Boeing.<br />
The European group’s factories<br />
worked overtime during the Christmas<br />
holidays to make up for delays because<br />
of supplier issues.<br />
Guillaume Faury, head of Airbus’s<br />
commercial arm, had made sorting out<br />
the company’s supply chain a key focus.<br />
Mr Faury, who takes the helm from<br />
chief executive Tom Enders in April, is<br />
understood to have launched a review<br />
looking at Airbus’s ways of working,<br />
industry executives with knowledge of<br />
the move confirmed.<br />
The group said in October that it<br />
would deliver about 20 fewer aircraft but<br />
still hoped to meet its target by including<br />
18 A220 jets, the model acquired<br />
through its purchase of the Bombardier<br />
C series. Deliveries are watched by investors<br />
as a key indicator for cash flow.<br />
Airbus had delivered 673 aircraft to<br />
the end of November, leaving it 127 jets<br />
short of its target.<br />
Analysts at Vertical Research Partners<br />
are forecasting 797 deliveries for<br />
2018. Industry sources pointed out that<br />
Airbus was in a similar position in 2017<br />
but still managed to close that year with<br />
a record 718 deliveries.<br />
A spokesman declined to comment<br />
on the final tally, which will be announced<br />
on Friday, but said “the Airbus<br />
team worked flat out until the very last<br />
hours of December 31”.<br />
Boeing, which will unveil its numbers<br />
on Tuesday, had been targeting<br />
between 810 and 815 deliveries in 2018,<br />
up from 763 in 2017. It had delivered 704<br />
planes by the end of November.<br />
In terms of the annual orders race,<br />
Boeing was far ahead of its European<br />
rival by the end of November with 690<br />
net firm orders, fuelling speculation<br />
that it would break Airbus’s five-year<br />
winning streak.<br />
Airbus had reported 380 net firm<br />
orders in the same period but last week<br />
said it had firmed up two more deals<br />
for another 120 aircraft. In 2017, Airbus<br />
secured 1,109 net orders while Boeing<br />
netted 912.<br />
The court agreed and ordered<br />
Richard to hand back his property<br />
to NatWest.<br />
However, the FOS had told Nat-<br />
West about the complaint by at least<br />
early July, according to correspondence<br />
seen by the Financial Times.<br />
The bank’s claim to have no<br />
knowledge of the issue was also<br />
directly contradicted by the office<br />
of chief executive Ross McEwan one<br />
week after the court hearing. A representative<br />
from his office told the<br />
customer’s local MP that RBS could<br />
not discuss his case because of an<br />
“ongoing complaint” with the FOS.<br />
After being contacted by the<br />
FT, RBS acknowledged that there<br />
had been an error in its witness<br />
statement.<br />
“We are aware of [Richard’s]<br />
situation, and understand that the<br />
Financial Ombudsman Service<br />
have reopened their investigation.<br />
We will not take any further action<br />
against [Richard] at this time<br />
and await the outcome of their<br />
independent investigation,” said a<br />
spokesperson.<br />
The case comes as the taxpayerowned<br />
bank is battling to improve<br />
customers’ perceptions after largely<br />
completing its decade-long restructuring.<br />
RBS was ranked the country’s<br />
least popular bank brand in an<br />
official ranking published by competition<br />
regulators this year, while<br />
NatWest was tenth of 16. Executives<br />
have made customer satisfaction<br />
a priority after admitting the bank<br />
had been “distracted” with internal<br />
problems in recent years.<br />
It came under particular fire for<br />
the behaviour of its Global Restructuring<br />
Group, which was accused<br />
of “widespread and systematic”<br />
mistreatment of struggling small<br />
businesses after the financial crisis.<br />
RBS has pledged changes to<br />
ensure “past mistakes cannot be<br />
repeated”, but has nonetheless faced<br />
accusations of being overly aggressive<br />
towards individual customers.<br />
This month, for example, the BBC reported<br />
that RBS refused to compensate<br />
a customer who was defrauded<br />
of £20,000 after a violent mugging<br />
until it was contacted by reporters.<br />
In addition to the witness statement,<br />
Richard said RBS had repeatedly<br />
refused to engage with his efforts<br />
to arrange a way to repay his arrears,<br />
and pushed him into further debt by<br />
reneging on agreements to renew the<br />
fixed rate on the rest of his mortgage.<br />
Airbus under spotlight with race to hit delivery target<br />
European aircraft maker struggling to close orders gap with US rival Boeing<br />
Sylvia Pfeifer and Patti Waldmeir<br />
BUSINESS DAY<br />
59<br />
“Boeing will end up ahead in 2018<br />
in terms of deliveries and orders, on<br />
the back of their wide-body strength,<br />
and that’s confirming a trend we saw<br />
in 2017,” forecasts Chris Higgins, aerospace<br />
analyst at Morningstar Securities.<br />
He estimates that Boeing secured<br />
around 200 wide-body orders in 2018,<br />
nearly four times as many as Airbus.<br />
“It’s a structural issue, it’s not a<br />
one-year issue, and that has potential<br />
implications for Airbus, they may have<br />
to refresh their wide-body line-up much<br />
sooner than they expected.”<br />
Richard Aboulafia, analyst at the<br />
Teal Group, said what mattered most<br />
was the “book-to-bill ratio”. Based on<br />
the end of November figures, Boeing<br />
could achieve a ratio of 1.0 — meaning<br />
new orders would match the number of<br />
aircraft deliveries.<br />
Mr Higgins forecasts that the current<br />
year could be challenging for both<br />
aircraft manufacturers. “Given the<br />
economic backdrop, which is to say<br />
cautiously pessimistic, there are going to<br />
be a lot of airlines sitting on their hands<br />
in terms of orders this year. I’d not be<br />
surprised if <strong>2019</strong> comes in flat or maybe<br />
even down a bit in terms of orders”.