Barclays Discloses FCPA Probe Putting it in U.S.’s Crosshairs Again
By Douglas Gillison | October 31, 2012 1:33 pm

Four months after settling for $160 million with the Justice Department over interest rate manipulation, the London multinational banking and financial services giant Barclays plc announced Wednesday in a statement to the London Stock Exchange that it was under investigation for potential foreign bribery by both the Justice Department and the Securities and Exchange Commission.

The company said it was fully cooperating with the investigations, which concerned third-party relationships. The statement did not disclose where or when the potential violations may have occurred but the news follows the disclosure in August by Britain’s Serious Fraud Office that it was investigating “certain commercial arrangements” in 2008 between Barclays Bank and Qatar Holding LLC, a subsidiary of the Qatar Investment Authority, the Gulf state’s sovereign wealth fund.

Barclays raised about £7 billion, or $14 billion at contemporary exchange rates, from Qatari and Abu Dhabi sovereign wealth funds as the financial crisis was beginning in 2007. This helped the bank avoid a government bailout, according to Bloomberg.

The SFO probe was in cooperation with the U.K. Financial Services Authority. The SEC last year began probing the possibility of foreign bribery violations in soliciting investments from sovereign wealth funds, which are investment funds maintained by countries with large budget surpluses, often due to oil and gas income.

Barclays also revealed that it was simultaneously under investigation by the U.S. Federal Energy Regulatory Commission for power trading in the U.S. between 2006 and 2008. The FERC said on Oct. 25, that it had drawn up proposed penalties but Barclay’s said it intended to defend itself “vigorously” in the matter.

The company closed down 4.72 percent on Wednesday at £227.52 on the London Stock Exchange, erasing gains made since Monday, and down 8 percent since Oct. 18.

A company representative did not immediately answer a request for comment. Here is the relevant portion of Wednesday’s statement to the market:

  • Subsequent to reporting the investigations of the Financial Services Authority and Serious Fraud Office in July and August 2012 respectively, Barclays has been informed by the US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC) that they are undertaking an investigation into whether the Group’s relationships with third parties who assist Barclays to win or retain business are compliant with the United States Foreign Corrupt Practices Act. Barclays is investigating and fully co-operating with the DOJ and SEC
  • The United States Federal Energy Regulatory Commission (FERC) Office of Enforcement (FERC Staff) has been investigating Barclays power trading in the western US with respect to the period from late 2006 through 2008. On 25 October 2012, the FERC notified Barclays that it has authorised the issuance of a public Order to Show Cause and Notice of Proposed Penalties against Barclays in relation to this matter. The Order and Notice could be issued as early as today. Barclays intends to vigorously defend this matter

Previous coverage by Just Anti-Corruption:

Wednesday, August 29, 2012
Wednesday, August 29, 2012
Monday, April 16, 2012
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