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New Investigation Launched By Serious Fraud Office Launch Into Barclays Payments

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Barclays is going through one of the most turbulent periods in its history
Barclays is going through one of the most turbulent periods in its history

The Serious Fraud Office has launched an investigation into payments made between Barclays bank and Qatar at the height of the financial crisis.

The bank said last month that the matter was being investigated by the Financial Services Authority but revealed on Wednesday that the SFO has launched its own probe.

The organisation is understood to be looking at whether disclosure of payments to advisers was sufficient when it raised more than £5 billion of emergency capital from Middle Eastern investors in 2008.

The SFO's investigation is the latest blow for Barclays' battered reputation after it received a record fine for its part in the Libor rate-rigging scandal, the Press Association reported.

Barclays revealed last month that the FSA's investigation centred on four present and past senior staff, including current group finance director Chris Lucas, although the SFO is thought to be currently looking at the bank rather than any individuals.

The probes are thought to be related to funds raised from investors, which effectively allowed Barclays to avoid following in the footsteps of Lloyds and Royal Bank of Scotland in taking a bailout.

The deals were controversial because they offered favourable terms not available to other shareholders, although there is no suggestion that the investors have done anything wrong.

Barclays has endured one of the most turbulent periods in its history after it was fined £290 million by UK and US regulators for manipulating Libor, an interbank lending rate which affects mortgages and loans.

The affair led to the departure of chief executive Bob Diamond, triggered a fierce debate in Westminster over banking ethics and has spawned several closely-watched hearings before the Treasury Select Committee.

Since then, Barclays has also been caught up in a separate investigation, as it faces a potential £450m bill for mis-selling complex financial products to unwitting small businesses.

In total, Barclays raised about £6 billion from the Middle East in 2008. Of this, about £3.5bn was from Manchester City owner Sheikh Mansour Bin Zayed Al Nahyan - a member of Abu Dhabi's royal family.

A further £2bn came from Qatar Holding - part of sovereign wealth fund Qatar Investment Authority - while £300m was from Qatar's royal family.

The SFO's inquiry focuses solely on payments made under "certain commercial agreements" between Barclays and Qatar Holding.

The SFO's move will ramp up pressure on Barclays after it already opened a criminal investigation into the the Libor rate-rigging scandal after it said last month that there were adequate grounds to prosecute banks and bankers.

Barclays is the only bank to have admitted attempting to rig Libor, though several others are also the subject of international investigations.

Wednesday's announcement was made after the stock market closed, so it will not be known until Thursday what impact the development will have on Barclays' shares.