It emerged this week that Linklaters escaped being embroiled in the Barclays / Qatar crisis after a partner at the firm showed a commendable level of integrity and declined to act for the bank.
In 2008 the firm acted for Barclays on a £3bn loan to Qatar. Documents filed in the High Court this week claim that the firm pointed out to its client that the loan could be deemed to be unlawful financial assistance for the purchase of Barclays' own shares. Linklaters insisted that a caveat be included stating that the money would not be reinvested in the bank. When this was resisted by the bank, Linklaters took the principled decision to step down and refuse to act.
The problem with principles, of course, is that they have to be paid for. Linklaters must have lost a fortune due to its decision, back at a time when the world was in financial meltdown and it could probably have used the fees. But it was the right call. Two months ago the Serious Fraud Office charged Barclays and a number of senior executives, including former CEO John Varley, over the loan. They now face a criminal trial. Linklaters' partners, who might well be in the dock alongside the execs had the firm continued to act, are instead safely ensconced in Silk Street earning £1.5m a year each. As a poster on RoF's discussion board pointed out, "the other partners need to keep the partner who took the decision in beers and anything else he wants for the rest of his life".
A spokeswoman for Linklaters declined to comment.
Tip Off ROF
In 2008 the firm acted for Barclays on a £3bn loan to Qatar. Documents filed in the High Court this week claim that the firm pointed out to its client that the loan could be deemed to be unlawful financial assistance for the purchase of Barclays' own shares. Linklaters insisted that a caveat be included stating that the money would not be reinvested in the bank. When this was resisted by the bank, Linklaters took the principled decision to step down and refuse to act.
The problem with principles, of course, is that they have to be paid for. Linklaters must have lost a fortune due to its decision, back at a time when the world was in financial meltdown and it could probably have used the fees. But it was the right call. Two months ago the Serious Fraud Office charged Barclays and a number of senior executives, including former CEO John Varley, over the loan. They now face a criminal trial. Linklaters' partners, who might well be in the dock alongside the execs had the firm continued to act, are instead safely ensconced in Silk Street earning £1.5m a year each. As a poster on RoF's discussion board pointed out, "the other partners need to keep the partner who took the decision in beers and anything else he wants for the rest of his life".
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A spokeswoman for Linklaters declined to comment.
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Can someone explain why, if it had continued to act for Barclays, Linklaters would have been on any sort of ethical or legal hook?
This is what contemporaneous file notes are for, people.
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Although I didn't see any mention of anyone on the in-house legal side (surely they signed off that thing as well) being charged. Or have I missed that?
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Section 330 makes it an offence for a person employed in the regulated sector to fail to disclose knowledge or suspicion of money laundering and the transfer of funds do seem to constitute a money laundering offence. Presumably, the firm knew of the proposed transaction and its potential illegality. On the face of it, the firm was under a duty to disclose its knowledge or suspicion. Presumably, it did just that. However, if it had done so, presumably the potentially illegal transaction would have been halted.
On the other hand, the firm may have decided to rely on the legal professional privilege defence in section 330(6)(b) POCA. This defence should be handled with great caution. In this case, the clients were, to the firm’s knowledge, about to commit a criminal offence.
This situation is an interesting reminder to lawyers that perhaps walking away is not enough. Having said that, it seems as if Linklaters are not being investigated for any offence under the POCA. And I have seen no reports that the Law Society is interested in this aspect.
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I also love* the fact that genuine questions are answered by others with derision without even giving a proper answer.