Barclays face U.S. investigation on Saudi license

The U.S. Department of Justice is currently looking into Barclay’s allegedly improper payment to gain banking license in Saudi Arabia, reported Financial Times Friday.

According to sources, U.S. prosecutors are skeptical on how the bank managed to win a license to operate its wealth-management and investment banking services in the Kingdom in 2009.

The report added that the Saudi inquiry follows an unrelated UK investigation led by the Serious Fraud Office (SFO) and the Financial Services Authority (FSA), which are looking into payments made by the bank to Qatar as part of a cash call transaction in 2008.

Barclays, headquartered in London, provides services in personal banking, credit cards, corporate banking, wealth management and investment banking and was also one of the western banks to enter the region after the Saudi Capital Market Authority began to unscrew tight access of foreign companies to the country.

The on-going investigation aims to dig deeper over issues whether payments made have breached the U.S. Foreign Corrupt Practices Act (FCPA).

The FCPA, passed in 1977, serves the sole purpose of making it unlawful for certain classes of persons and entities with direct links to the U.S. to make payments or hand bribery to foreign government officials to assist in obtaining or retaining businesses.

The DoJ has been granted powers to prosecute violators if investigation findings confirm that payment was made to gain license in behalf of a company with direct links to the U.S.

Last week, the financial institution faced a series of fines admitting that it has been handed by U.S. regulators a penalty worth $35 million and a restitution of $35 million in proceeds for allegedly inappropriate trading, added the report.

The bank was also under criminal investigation for allegedly manipulating Libor, the London Interbank Offered Rate, but have settled allegations in June by paying a fine amounting to $29 million.

The SFO recently handed the London-based bank with a “section two notice,” requiring the bank to submit official papers and provide witnesses, sources said.

The bank said that it is cooperating with on-going U.S. FCPA investigations but refused to give further details, the Financial Times reported.