Questions about the bank’s conduct are not confined to the UK, with its overseas operations about to be scrutinised in Milan
Britain is not the only country in which Barclays is at the centre of current controversy.
In the autumn, four of the bank’s executives, including the former chief executive of Barclays’ Italian subsidiary, are to be put on trial in Milan.
In the first of two cases, the bank is the alleged victim. Vittorio Maria De Stasio, who headed Barclays Italia, is to go on trial on 20 September accused of taking €250,000 from a businessman in exchange for agreeing to lend his companies more than €10m, even though they were not regarded as creditworthy. De Stasio denies wrongdoing.
The businessman accused of making the alleged payment, Aldo Bonaldi, is an Italian based in Monaco. He is currently on the run after prosecutors in the southern city of Crotone issued a warrant for his arrest in a separate case involving the alleged embezzlement of EU funds.
But it is the second of the two trials, due to begin on 1 October, which is likely to attract most attention. In this case, the spotlight will be on an alleged Barclays tax evasion scheme and among the defendants will be three of its executives.
The other defendants include Alessandro Profumo, formerly chief executive of Italy’s biggest bank, UniCredit. At the heart of the trial is Project Brontos, one of several schemes to which the Guardian tried to draw attention three years ago.
In March 2009, the paper posted to its website seven internal Barclays memos which had been stolen by a disaffected ex-employee. But the initiative was blocked by an emergency gagging order that was subsequently upheld by a high court judge and the memos were removed from the site.
The prosecution in the Milan case maintains that Barclays created for UniCredit a financial structure that allowed the Italian bank to cut its tax bill by €245m. According to the prosecution, Project Brontos involved using trusts to make interest payments look like dividends, which under Italian law attract a lower rate of taxation. The scheme is alleged to have operated in 2007 and 2008.
The documents were originally sent by a whistleblower to Vince Cable, the business secretary, who was at that time in opposition as deputy leader of the Liberal Democrats. The Sunday Times, which first reported the existence of the documents, quoted the source as saying Project Brontos had made Barclays £55m. At the high court hearing, an expert witness said the scheme involved the Milan branch of Barclays and an entity in Luxembourg.
The three Barclays executives due to go on trial are Maria Celeste Mariotti of the bank’s Milan office and Stefano Filippi and Rupack Chandra, both of Barclays’ Structured Capital Markets division – a specialist tax division within the bank. All three deny the charges.
When they were indicted the bank said it continued “to believe firmly that it and the individuals involved have not violated any tax or other laws in Italy”.
In correspondence with Cable, the source of the documents claimed to have worked as a member of the Structured Capital Markets division. The whistleblower described it as “a team of some 110 people with the sole purpose of structuring tax-aggressive transactions to avoid tax not only for Barclays but also for banks and companies across the world”.
The other defendants are all UniCredit employees. Profumo, who left the bank two years ago after a clash with the board, described himself as “confident and impatient” for the start of the trial. He said he was certain of the correctness of his conduct.