Bankers Behaving Badly: Amanda Staveley loses court case against Barclays despite bankers’ misconduct
March 20, 2021
2 min read
What's going on here?
The High Court has ruled that finance firm PCP Capital, owned by Amanda Staveley, was not entitled to damages from Barclays. It held that although Barclays bankers acted inappropriately when transacting with the firm, this didn’t cause it to suffer loss.
What does this mean?
During the 2008 financial crisis, Barclays resolved to recapitalise and avoid a government bailout by seeking private investment. PCP acted for Emirati politician Sheikh Mansour, who paid £3.25bn for a 16% stake in the bank.
In June 2020, PCP sued Barclays for £1.5bn. This figure was scaled back to £660m over the course of the trial. The firm alleged that the bank had transacted with its Emirati client on “manifestly worse” terms than those agreed with Qatari investors, and that its executives had repeatedly lied about this to Staveley. PCP claimed that this resulted in it having to pull out of the deal, causing millions of pounds in commission to be lost. The trial also heard that Barclays executives had made sexist remarks about Staveley during the deal negotiations, including describing her as a “dolly bird” and a “tart”.
Mr Justice Waksman “found Barclays to be guilty of serious deceit”. However, he took the view that but for this misconduct, PCP would not have been able to raise the funds needed to complete the deal and would have had to back out of it anyway. Therefore, no damages were awarded.
What's the big picture effect?
This ruling seems to be a huge triumph for Barclays. However, the bank still has civil, regulatory and reputational consequences to face up to.
Staveley is considering appealing the decision. Causation is a long-established and deeply entrenched legal principle. It has been an essential requirement for a successful claim since the inception of English tort law in the 19th century. In the absence of a causal link between the wrong committed and the loss suffered, it seems highly unlikely that an appeal would result in an award of damages. However, Waksman J’s unequivocal determination of the bank’s deceit is likely to influence the Financial Conduct Authority’s ongoing investigation into the transaction. The financial regulator is expected to order Barclays to pay a fine of around £50m for failing to disclose the terms of its fundraising to the financial markets.
Further to its potential legal consequences, the widespread media coverage of this case is a publicity disaster for Barclays. It has revealed fraudulent misrepresentation in the bank’s dealings with investors. This will likely make it more difficult and costly for it to raise equity capital in the future. It has also exposed the blatant sexism and misogyny of the organisation’s most powerful executives, which is sure to damage consumer confidence. If and how the bank will seek to mitigate the reputational damage stemming from the trial remains to be seen. This is arguably the most high-profile legal battle to come out of the financial crisis, and it’s not over yet.
Report written by Isobel Deane
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