Banque Havilland faces £10mn fine from UK watchdog over Qatar scheme

The UK’s financial regulator has provisionally fined Banque Havilland £10mn and plans to ban its former London chief executive and two other ex-employees for their role in a 2017 plan to devalue Qatar’s currency after the Gulf state was embargoed by its neighbours.

The Financial Conduct Authority said on Friday that the Luxembourg-based bank “acted without integrity” by disseminating a document with manipulative trading strategies. These aimed to create a false impression around the market in Qatar’s bonds, breaking the riyal’s peg to the US dollar and “thereby harming the economy of Qatar”, according to the FCA.

The FCA found that tactics included trying to weaken Qatar’s financial position in the run-up to the 2022 World Cup, which the Gulf state hosted and for which it had committed $200bn in infrastructure spending.

Banque Havilland intended to present the document to representatives of countries seeking to put economic pressure on Qatar, including the United Arab Emirates, to market its services, according to the regulatory findings. A copy of the bank’s document was provided to a representative of an Abu Dhabi sovereign wealth fund, the FCA added.

Along with bans from financial services, the FCA plans on fining Edmund Rowland, the former chief executive of the London branch, £352,000; David Weller, a former senior manager, £54,000; and Vladimir Bolelyy, a former employee, £14,200.

The decisions are provisional; the bank, Rowland and Bolelyy are challenging the rulings at a tribunal. While Weller is not contesting the FCA’s findings, the watchdog’s decision in his case too is being referred to the tribunal by another individual, David Rowland, who argues that the FCA’s decision unfairly prejudices him.

The FCA declined to provide contact information for the individuals’ defence solicitors at their request.

“Banque Havilland’s conduct actively encouraged the commission of financial crime, providing ideas for manipulative trading to someone it saw as having the political motivation to be potentially interested in such ideas,” said Therese Chambers, the FCA’s executive director of enforcement and market oversight. “It barely needs stating, but such conduct is completely unacceptable.”

The FCA did not find that the strategy in the document had been implemented, but such “manipulative trading” could have been a criminal offence had it taken place in the UK, the watchdog said.

In a statement Banque Havilland confirmed that it was referring the FCA decision to the Upper Tribunal. The bank said it was “disappointed in the decision reached by the FCA and does not accept that it is directly liable for the actions of the individuals implicated in the criticised activity, who have long since left the bank”.

In 2017, Qatar was placed under a damaging trade and travel boycott by its larger neighbours, led by Saudi Arabia and the UAE. They cut off travel and trade links with gas-rich Qatar, accusing it of fostering Islamist extremism, a charge denied by Doha.

In the aftermath of the shock embargo, pressure grew on the Qatari economy, which had to repatriate about $20bn in overseas assets to shore up its financial system.

Qatar also had to open new aviation and shipping routes and rely on military support from its ally Turkey to secure the state.

Both sides have accused the other of engaging in dirty-tricks tactics, hacking and leaking sensitive information to inflict reputational damage.

At an internal meeting, Rowland said Saudi Arabia, Abu Dhabi and Egypt were prepared to use a combined $23bn of Qatari assets to pressure the riyal, according to the FCA decision notice.

One preparatory document, named “Setting Fire to the Neighbour’s House Fund”, outlined details of the strategy to attack the riyal by building and then selling positions in Qatari debt instruments and launching a public-relations campaign to prompt a sell-off in the riyal and bonds.

The notice said the final presentation also mentioned a “Fifa option”, saying if Qatar were to spend its reserves on protecting the riyal there would be less “dry powder” for Qatar to meet its $200bn commitment of infrastructure spending for the 2022 World Cup.

In 2021, Saudi Arabia convened a meeting to end the dispute between Qatar and its neighbours, calling for unity in the face of Iranian threats.

Relations have since warmed, including high profile visits by Saudi and Emirati leaders to last year’s football tournament.

Additional reporting by Kate Beioley in London