July 21, 2020 Barclays Court Case shows importance of detailed minutes
An ongoing High Court case between Barclays and PSP highlights the importance of keeping detailed and accurate minutes. It is common for us to get requests from directors and clients to just focus on the key points and decisions in the board minutes. This can make the minutes easier to read and digest, but it runs the risk of losing much of the important discussion.
John Varley, the former chief executive of Barclays was cross-examined in the High Court regarding how much the Barclays board knew about two advisory services agreements (ASAs) worth £322m, which Barclays signed with Qatar.
Mr Varley contends that the board were fully aware of it and he briefed them at the board meeting but, critically the board minutes have little reference to it. Mr Varley said that “If I’d misled the board I would have been out of a job within five minutes.” However, without clear minutes it is harder for Mr Varley to verify what information was provided.
The ASAs were side agreements that were struck during the lender’s £7.3bn cash call in 2008 that meant Barclays was not taken over by the UK government.
Further details have been reported by the Financial Times here.
We have written before about the importance to the board, and in particular for INEDs, to have high quality board minutes in the banking sector and this only emphasises this point.
Often it is not possible to know what matters or agreements are going to take on significance in the future, although in this case the transaction was a critical one that was vital to the future survival of Barclays.
Although we cannot comment on the minutes or the situation around Barclays specifically, at Elemental we have seen situations where clients in critical or sensitive situations have asked for the minutes to be light on detail. This is sometimes seen as a ‘safer’ option by the board and, although this is in the discretion of the board and the Chair, we would rarely recommend that this approach is taken. This case highlights the importance of accurate, independent board minutes, not just for information, but to protect the interests of the company and the directors.
Elemental provides corporate governance and meeting support to many financial and non-financial companies. Please do get in touch if you would like to discuss how we can help you.