Varley drawn into FSA’s Qatar probe while Jenkins hints BarCap will shrink

JOHN Varley, former chief executive of Barclays, has been drawn into the Financial Services Authority (FSA) probe into unusual payments to Qatar’s sovereign wealth fund in the bank’s multi-billion pound refinancing in 2008.

It is understood that Varley, who later became chairman of the bank after handing control over to Bob Diamond, is one of the four current or former Barclays executives being investigated over “advisory fees” paid to Qatar Holdings.

At the bank’s interim results on 27 July, the lender would only confirm that incumbent finance director Chris Lucas was one of those being investigated regarding the matter.

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But sources familiar with the situation say Varley’s part in the £11 billion Middle East and Far Eastern investor bailout, which meant Barclays did not have to seek taxpayer aid like Royal Bank of Scotland and Lloyds, is being examined.

Analysts said that it was always likely Varley would be questioned by the FSA as he, as chief executive at the time, would be the architect of the fund-raising and likely to be heavily briefed on any financial matters by Lucas.

Barclays’ former head of investment banking for the Middle East, Roger Jenkins, is also believed to be one of the four being questioned. It comes after Barclays was forced to admit last week that it is also the subject of a Serious Fraud Office investigation related to the payments.

In addition, the bank was recently fined a total of £290 million by the FSA and its American counterparts for its part in the manipulation of the key London Interbank Offered Rate (Libor).

Neither the FSA or Barclays would comment yesterday.