Serious Fraud Office v Barclays Bank plc [2018] EWHC 3055 (QB)

The SFO applied to prefer a voluntary bill of indictment against Barclays following dismissal of charges relating to capital raisings in 2008. The court refused, holding that senior executives were not the 'directing mind and will' of the company for completing the transactions, as ultimate authority remained with the Board and committees.

Facts

During the 2008 banking crisis, Barclays Plc and Barclays Bank Plc undertook two capital raisings (CR1 and CR2) to avoid government bailout. The Serious Fraud Office alleged that senior executives John Varley (Chief Executive), Roger Jenkins (Executive Chairman of Investment Management), and Christopher Lucas (Group Finance Director) conspired to make false representations in prospectuses and subscription agreements regarding commissions paid to Qatari investors. The SFO alleged that Advisory Service Agreements (ASA1 and ASA2) were shams designed to disguise additional commissions, and that a US$3 billion loan was unlawfully provided to fund the Qatari subscription.

Corporate Structure

The Board had delegated authority to the Board Finance Committee (BFC) to oversee the capital raisings. The BFC retained ultimate authority to approve the transactions. Neither the Board nor BFC knew of the alleged true purpose behind the Advisory Service Agreements. The Group Credit Committee (GCC) approved the loan but specifically prohibited its use to fund the CR2 subscription.

Issues

The central issue was whether the alleged criminal dishonesty of senior officers could be attributed to Barclays so as to render the corporation itself criminally liable. Specifically:

• Were the individual executives the ‘directing mind and will’ of Barclays for the purpose of the relevant transactions?
• Could a ‘special rule of attribution’ apply in this case?

Judgment

Lord Justice Davis, sitting as a High Court judge, dismissed the SFO’s application to prefer a voluntary bill of indictment.

The Identification Principle

The court reaffirmed that Tesco Ltd v Nattrass [1972] AC 153 remains binding authority for attributing criminal culpability to corporations. The court noted:

“Save in those cases where consideration of the legislation creating the offences in question leads to a different and perhaps broader approach, as discussed in Meridian Global Funds Management Asia Ltd v The Securities Commission [1995] 2 AC 500, the test for the determining those individuals whose actions and state of mind are to be attributed to a corporate body remains that established in Tesco Supermarkets Ltd v Nattrass.”

Application to Facts

The court found that the individual executives were not the directing mind and will for the purpose of completing the transactions:

“By virtue of what, it may be asked, did JV, CL or RJ have authority not only to negotiate but also to complete and conclude and issue the Subscription Agreements and Prospectuses for CR1 and CR2 as to be finalised, signed and issued? The short answer is: they had no authority. They were not, in the words of Lord Hoffmann, authorised ‘to do the deal.'”

The court rejected the argument that Board resolutions were mere formalities:

“It simply is not acceptable, in my opinion, for the SFO to regard the various resolutions of the Board and of the BFC as, in effect, mere pieces of paper. They are not: they reflect the level of delegation sanctioned by the appropriate organs of the company… This is not a matter of form over substance. Rather, in this case, the form is the substance.”

Special Rule of Attribution

The court also rejected the application of any special rule of attribution, finding nothing in the Fraud Act 2006 or Companies Act 1985 to justify such a rule in circumstances where dishonesty was alleged but the relevant decision-making bodies were deceived.

Implications

This judgment has significant implications for corporate criminal liability:

• It confirms the continued application of the Tesco v Nattrass identification principle in criminal law
• It emphasises that delegation of negotiating authority does not equate to delegation of authority to conclude transactions
• Corporate governance structures and formal delegations of authority are substantively important in determining criminal attribution
• Where decision-making bodies are deceived by individuals, the company itself may not be criminally culpable even where senior executives acted dishonestly

The decision highlights the distinction between civil and criminal attribution principles and demonstrates the high threshold for corporate criminal liability under English law.

Verdict: Application to prefer a voluntary bill of indictment dismissed. The charges against Barclays Plc and Barclays Bank Plc remained dismissed as the alleged dishonest conduct and state of mind of the individual executives could not properly be attributed to Barclays to make it criminally culpable.

Source: Serious Fraud Office v Barclays Bank plc [2018] EWHC 3055 (QB)