There was an air of mild incredulity in some quarters of the City of London when John Varley, the former CEO of Barclays, was charged with fraud alongside the bank he once headed and three ex-colleagues.
Perhaps that’s because throughout that period the real public face of Barclays was Bob Diamond, the charismatic American who ran the investment bank. It was often easy to forget that it was, in fact, the gentlemanly and urbane Varley who was the boss of Barclays group at the time. Yet it is Varley who now faces a trial.
The two men certainly came from differing backgrounds and have contrasting personalities, which led to a widespread perception that Diamond really ran the show at Barclays and was simply waiting for the time of his choice to assume Varley’s role as CEO – which he eventually did in 2011, if only for one controversial year.
Diamond ran fixed income at Morgan Stanley and CSFB before joining Barclays in 1996, where he made far more money than Varley.
Diamond benefited from hefty bonuses (especially before he joined the Barclays board in 2005 and was forced to disclose his compensation) and from a share of the proceeds of the sale of investment arm BGI.
Varley, who qualified as a solicitor before going into banking, took a more traditional path to the top, although he is almost five years younger than Diamond. He married into the Pease family, one of the founding dynasties of Barclays, which was a refreshingly old-fashioned approach to getting ahead and was reportedly encouraged by his father-in-law, a former vice-chairman of the firm, to switch from law to banking.
Now Varley faces trial along with three former colleagues who were more closely associated with Diamond and might be viewed as players to Varley’s gentleman, to adopt the distinction used when English cricket divided its participants by class background.
Roger Jenkins built a business at Barclays based on aggressively structured tax deals, which became a big source of profit for the bank, as well as resentment among rival bankers well before the credit crisis of 2008. Others in the bank did not like his compensation – which reportedly was as high as £75 million ($96 million) in 2005 – and the way his tax deals generated so much money that they attracted regulatory attention and a clampdown on similar structures.
As chairman of investment banking for the Middle East for Barclays from April 2008, Jenkins reportedly took a lead role in arranging the investments from Qatar that year that are the subject of the current charges by the UK’s Serious Fraud Office (SFO).
Tom Kalaris was another key Diamond lieutenant, who by 2008 had been shifted from the investment bank to run wealth management for Barclays. Richard Boath, a former head of European financial institutions at Barclays, was less senior than the other executives charged by the SFO and has claimed that he was eventually dismissed from the bank for cooperating with the fraud agency’s inquiries.
Settlement of the case by Barclays and its former executives remains a possibility, but if the case goes to full trial it may emerge why the SFO singled out just four former bankers. Varley and Jenkins face more charges than Kalaris and Boath, which could place them in greater jeopardy. All four men are accused with Barclays of false representation over a June 2008 capital raising, but only Varley and Jenkins are charged with fraud over a second round of issuance in October 2008 and with unlawful financial assistance related to an associated $3 billion loan to Qatar.