It turns out that Barclays lied about one of the biggest investments in the history of banks.
An investigation of BBC found that Barclays had managed to avoid bailout by British tax payers not because of the money given from the Manchester City owner Sheikh Mansour, as it was announced, but with money given from the Abu Dhabi government.
In 2008, the gulf states of Qatar and Abu Dhabi gave most of the money needed for the rescue of Barclays.
Barclays had to tell the shareholders that there was a possibility that the investor might change but it did not and when some hours later the change happened Barclays said that Sheikh Mansour “has arranged for his investment…to be funded by an Abu Dhabi governmental investment vehicle, which will become the indirect shareholder”.
In the reports from 2008 and 2009, Sheikh Mansour was identified as the investor.
The explanation Barclay gave was that the mistake in its accounts was “simply a drafting error”.
According to the expert of financial regulation in the City, Professor Alistair Milne, banks are obliged to give correct information on its bigger deals.
Barclays mentioned that the Abu Dhabi government gave the funding some six months after the deal.
In fact, Sheikh Mansour gave none of his own money for Barclays, but the company he controlled was initially issued warrants to buy 758 million shares in the bank.
The lawyer for Transparency International said:
“You have to worry not because Sheikh Mansour may or may not be doing something wrong, you have to worry because you may be doing something wrong as a bank.
“You may be committing a crime, you may be paying a bribe if you have not got it straight as to which capacity the person you are dealing with is acting.”
There is no way that people find out who benefited from the warrants, because the transactions happened abroad, but all the 758 million shares were sold at price significantly below the market price.
The response of the bank was that “The Board of Barclays took the decision on capital raising in 2008 on the basis of the best interest of shareholder and its other stakeholders, including UK taxpayers”.
Having such financial schemes is always a little bit risky, and what you should do first is to enable your business with the necessary business documents.