Funny how the smallest things cause the biggest problems.

A typo.

A missed attachment.

A meeting you swear was in the calendar.

In Barclays’ case?

A “minor” side agreement worth £322M.

One detail they thought wouldn’t matter ended up haunting them sixteen years later… to the tune of a £40M fine.

You’re probably wondering what sort of “dodgy” terms could cause that much trouble (especially if you’re a business owner looking for funding).

Keep scrolling (it might save you from your own long-term disaster).

Allergic to long newsletters? Here’s the short version.

1/ In 2008, Barclays raised £11.8B privately from Qatar and Abu Dhabi to avoid a government bailout and stay independent during the financial crisis.

2/ Qatar pushed for fees more than double the market rate, and Barclays agreed - nothing illegal about that on its own.

3/ The problem? Barclays hid £322M of those fees inside “advisory services” agreements, rather than disclosing them to the rest of their investors.

4/ Sixteen years later, it caught up with them: a £40M FCA fine, SFO investigations and senior leaders facing criminal scrutiny.

5/ Avoiding the government didn’t protect them from oversight. It just meant the oversight came later, with more heat.

6/ Takeaway for SMEs: special terms aren’t the issue; secrecy is. If you’d be embarrassed to explain a deal term out loud, don’t sign it.

Back in 2008 - as the financial system fell apart - Barclays watched rivals queue for government bailouts. 

RBS and Lloyds took the lifeline. 

Barclays refused. 

They didn’t want the government anywhere near them. They wanted to stay in control of their own shop.

So instead of taking the bailout, they reached out to Qatar and Abu Dhabi.

From the outside, it looked like they’d played a blinder. The reality, however, was a lot more complicated once you read the small print.

Qatar wanted fees way above the normal rate, and Barclays didn’t offer the same terms to everyone else. So they pushed the extra £322M through “advisory service agreements” - basically, side payments they didn’t disclose properly.

At the time, nobody said anything.

…But then the FCA noticed.

…Then the SFO noticed.

…Then shareholders noticed.

Sixteen years later, the whole thing resurfaced - fines, investigations and a very expensive reminder that hidden terms don’t stay hidden forever.

Barclays got what it wanted (and needed) back in 2008. They survived the crisis without the government holding their hand. 

Fast-forward to 2024, though, and the bill smacked them in the face:

It couldn’t get any more ironic. Their whole mission was to avoid government oversight… only to end up with regulators crawling all over them anyway.

They avoided the government becoming a shareholder, but Qatar wanted higher fees, and the FCA eventually questioned the way those fees were hidden. So the “independence” wasn’t as free as it looked.

The banks that did take taxpayer money - RBS and Lloyds - swallowed their pride and moved on. Their reputational hit was fast, public and finished. Honestly, I respect the clean pain approach. Get it over with and get back to work.

Barclays, meanwhile, spent the next sixteen years dealing with investigations, fines and frustrated shareholders. What looked like the cleaner option at the time ended up being the far more expensive one.

When I shared this story on LinkedIn, a few people made a reasonable case: in 2008, banks didn’t have many options. If someone was willing to provide capital - even on tough terms - you took it.

And that part is true. In a crisis, there’s not much time for haggling.

Barclays’ problem wasn’t the rate they agreed to, however. It was the decision to handle the extra £322M in a way they couldn’t stand behind later. 

They could have disclosed the higher fee and dealt with whatever questions came their way. RBS and Lloyds did exactly that with their bailout terms and moved on.

The point I’m trying to make here is that transparency might seem like a painful compliance ritual, but it does keep you out of trouble when everyone else finally reads the paperwork.

You already know my view: paying a premium isn’t the problem. Hiding the premium is. So what should businesses in a similar situation do instead?

The real cost is power. Who gets a say? Who gets a seat? Who gets special rights or vetoes later because of the deal you signed under pressure? 

Barclays avoided the government because they didn’t want anyone in their business. Fair enough - but Qatar didn’t hand over money out of kindness. They wanted preferential terms, access and leverage.

I see SMEs do this all the time on a smaller scale. They bring in a “strategic investor” who later behaves like the shadow founder. 

The money is simple. 

The influence is not.

Price both.

Investors negotiate. They’re meant to. Give them a discount, give them a seat, give them warrants - whatever gets the round closed.

The problem starts when founders convince themselves they can tuck one deal away where nobody will look. Barclays’ issue wasn’t the higher fee. It was hiding £322M and hoping nobody checked the footnotes.

You can offer someone a better deal. Just don’t make it a secret. Investors hate surprises almost as much as regulators do.

Nothing distorts judgement like a deadline.

“We need this signed today”

“This investor will walk”

“We’ll sort the details later”

That’s the exact moment you’re most likely to agree to something you can’t defend six months from now. Calm decisions come from calm conditions - but unfortunately, capital raises don’t come with calm conditions.

Barclays got their quick fix in 2008 and paid for it in slow motion for sixteen years. A deal you rush will eventually slow you down.

Independence doesn’t always mean free. It isn’t some kind of moral victory. It’s a set of trade-offs:

Government money has rules.

Private money has expectations.

Sovereign money has influence.

Angels have opinions.

Choose what you can tolerate. Barclays picked “no government” but we know how that turned out…

Reputation as a form of currency - and once you spend it, you don’t get a refund.

When Barclays’ story resurfaced in 2024, the reaction said it all. People felt misled, and once that happens, it doesn’t matter how good the original strategy was. 

My advice for SMEs is: just do the right thing, even when it’s inconvenient. The short-term gain from cutting corners never outweighs the long-term cost of looking like you can’t be trusted.

Every now and then I veer off into a personal tangent - humour me. 

The best part of the year for me was moving into a bigger office.

It’s been a huge milestone for me - for the FundOnion team - and it’s great having everyone in one place, working at full capacity. 

Let’s wrap this up in nine words: 

Win the deal, ruin the trust. Not worth it.

If you enjoy untangling questionable finance decisions like this one, I post plenty more on LinkedIn. Bring your opinions to my page because I love hearing other perspectives!

Till next time,

James