Barclays Calls Amanda Staveley's $1B Lawsuit Misconceived

Barclays (LON:BARC) PLC (NYSE:BCS) termed a $1.0 billion (£721 million) lawsuit filed by British financier Amanda Staveley over the former’s emergency capital-raising from Gulf investors during the global financial crisis of 2008 as "fundamentally misconceived".

Deal in Brief

Claims made by Staveley’s private equity firm PCP Capital Partners involved nearly £7 billion fundraising dealings between Barclays, Qatari and Abu Dhabi investors in 2008.

In a suit filed in London’s High Court in January this year, Staveley sought compensation for alleged deceptive misrepresentation related to potential fees in the whole deal between Barclays and the Middle East, which helped the bank deflect a taxpayer bailout. Staveley sued Barclays for £721 million in fees owed by PCP Capital for being involved in the key financing.

According to Staveley, PCP Capital was supposed to be a potential investor in the Abu Dhabi syndicate and should have been compensated for participating in the fundraising. Notably, PCP Capital advised Abu Dhabi's Sheikh Mansour bin Zayed Al Nahyan on the deal.

Also, PCP Capital should have allegedly received the same deal as Qatari investors as all participants were assured of being treated equally. However, Qatari investors received an extra fee of £346 million more than PCP Capital.

Update

Barclays denied it made "representations which were false" in court documents. According to the bank, PCP Capital was just an adviser in the deal and not a prospective investor. Also, Barclays alleged that the extra fee paid to Qatari investors was for "separate services which required separate payment".

In a 45-page defence filed at the High Court, Barclays also claimed that Staveley's allegations make "a number of unfounded and unsubstantiated" assumptions that resulted "in a wholly artificially inflated loss calculation."

"The claim is fundamentally misconceived. Barclays' understanding at all material times was that PCP-LLP was acting on behalf of Sheikh Mansour, not on its own behalf," Barclays said.

"In any event the representations were not made as alleged, and PCP-LLP is unable to establish that it suffered any loss as a result of the alleged representations," the bank added.

As per the court document, "In so far as Barclays made any representations, Barclays denies that it made those representations dishonestly or recklessly."

SFO Inquiry

The lawsuit comes at the time when the Serious Fraud Office is investigating the supposedly undisclosed payments made by Barclays to Qatari investors during 2008. A separate criminal probe is ongoing into Barclays’ financial arrangements with Qatar at the time of the credit crisis in 2008.

Currently, Barclays holds a Zacks Rank #2 (Buy). Some foreign banks with the same rank include Bank of Montreal (TO:BMO) , The Toronto-Dominion Bank (TO:TD) and Itaú Unibanco Holding S.A. (NYSE:ITUB) .


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