Barclays 2013 Annual Report Download - page 342

Note 30: Legal, competition and regulatory matters continued
Swiss/US Tax Programme
In August 2013, the DOJ and the Swiss Federal Department of Finance announced the Programme for Non-Prosecution Agreements or Non-
Targeted letters for Swiss Banks (Programme). This agreement is the consequence of a long-running dispute between the US and Switzerland
regarding tax obligations of US Related Accounts held in Swiss banks.
Barclays Bank (Suisse) SA and Barclays Bank PLC Geneva Branch are participating in the Programme, which requires a structured review of US
accounts. This review is ongoing and the outcome of the review will determine whether any agreement will be entered into or sanction applied
to Barclays Bank (Suisse) SA and Barclays Bank PLC Geneva Branch. The deadline for completion of the review is 30 April 2014.
Investigations into Certain Agreements
The FCA has investigated certain agreements, including two advisory services agreements entered into by BBPLC with Qatar Holding LLC (Qatar
Holding) in June and October 2008 respectively, and whether these may have related to BPLC’s capital raisings in June and November 2008.
The FCA issued warning notices (Warning Notices) against BPLC and BBPLC in September 2013. The existence of the advisory services agreement
entered into in June 2008 was disclosed but the entry into the advisory services agreement in October 2008 and the fees payable under both
agreements, which amount to a total of £322m payable over a period of five years, were not disclosed in the announcements or public documents
relating to the capital raisings in June and November 2008. While the Warning Notices consider that BPLC and BBPLC believed at the time that
there should be at least some unspecified and undetermined value to be derived from the agreements, they state that the primary purpose of the
agreements was not to obtain advisory services but to make additional payments, which would not be disclosed, for the Qatari participation in the
capital raisings. The Warning Notices conclude that BPLC and BBPLC were in breach of certain disclosure-related listing rules and BPLC was also in
breach of Listing Principle 3 (the requirement to act with integrity towards holders and potential holders of the company’s shares). In this regard,
the FCA considers that BPLC and BBPLC acted recklessly. The financial penalty in the Warning Notices against the group is £50m. BPLC and BBPLC
continue to contest the findings.
The FCA proceedings are now subject to a stay pending progress in an investigation by the SFO’s Fraud Office into the same agreements. The
SFO’s investigation is at an earlier stage and the Group has received and has continued to respond to requests for further information.
The DOJ and the SEC are undertaking an investigation into whether the Group’s relationships with third parties who assist BPLC to win or retain
business are compliant with the United States Foreign Corrupt Practices Act. They are also investigating the agreements referred to above
including the two advisory services agreements. The US Federal Reserve has requested to be kept informed.
General
The outcomes of the matters disclosed in this note are difficult to predict. The Group has not disclosed an estimate of the potential financial effect
on the Group of contingent liabilities arising from these matters where it is not practicable to do so or, in cases where it is practicable, where
disclosure could prejudice conduct of the matters. Provisions have been recognised for those cases where the Group is able reliably to estimate
probable losses. The Group may incur significant expense in connection with these matters, regardless of the ultimate outcome; furthermore
these matters could expose the Group to any of the following: substantial monetary damages and fines; other penalties and injunctive relief;
potential for additional civil or private litigation; potential for criminal prosecution in certain circumstances; potential regulatory restrictions on the
Group’s business; and/or a negative effect on the Group’s reputation. There is also a risk that such investigations or proceedings may give rise to
changes in law or regulation as part of a wider response by relevant law makers and regulators. Any of these risks, should they materialise, could
have an adverse impact on the Group’s operations, financial results and condition and prospects.
As mentioned above, the Group is subject to a NPA entered into with the DOJ in connection with the LIBOR investigations. Under the NPA, the
Group has agreed that, for a period of two years from 26 June 2012, it will, amongst other things, commit no US crime whatsoever and will comply
with certain obligations to provide information to and co-operate with US authorities. A breach of any of the NPA provisions could lead to
prosecutions in relation to the Group’s benchmark interest rate submissions and could have significant consequences for the Group’s current and
future business operations in the US.
The Group is engaged in various other legal, competition and regulatory matters both in the UK and a number of overseas jurisdictions. It is
subject to legal proceedings by and against the Group which arise in the ordinary course of business from time to time, including (but not limited
to) disputes in relation to contracts, securities, debt collection, consumer credit, fraud, trusts, client assets, competition, data protection, money
laundering, employment, environmental and other statutory and common law issues.
The Group is also subject to enquiries and examinations, requests for information, audits, investigations and legal and other proceedings by
regulators, governmental and other public bodies in connection with (but not limited to) consumer protection measures, compliance with
legislation and regulation, wholesale trading activity and other areas of banking and business activities in which the Group is or has been engaged.
At the present time, the Group does not expect the ultimate resolution of any of these other matters not disclosed in this note to which it is a party
to have a material adverse effect on its financial position. The Group has not disclosed an estimate of the potential financial effect on the Group of
contingent liabilities where it is not practicable to do so or, in cases where it is practicable, where disclosure could prejudice conduct of matters.
However, in light of the uncertainties involved in such matters, there can be no assurance that the outcome of a particular matter or matters will
not be material to the Group’s results of operations or cash flow for a particular period, depending on, among other things, the amount of the loss
resulting from the matter(s) and the amount of income otherwise reported for the reporting period.
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340 Barclays PLC Annual Report 2013
Notes to the financial statements
For the year ended 31 December 2013 continued