Barclays in fresh controversy over profiting £500 mn from food price speculation
03 September 2012
British banking giant Barclays Plc has come under attack for alleged speculation in global food prices and making over half a billion pounds through commodities trade in the last two years.
The bank's investment arm Barclays Capital has been reportedly gambling on food staples, pushing up the prices, while millions of poor across the globe face poverty and starvation.
UK's World Development Movement (WDM), an organisation which campaigns against poverty and inequality, has accused Barclays of making around £529 million in 2010 and 2011 through speculation in the food commodities market.
According to WDM estimates, Barclays made up to £340 million in 2010 when the prices of agricultural commodities were high and in the subsequent year, made a smaller sum of £189 million due to fall in prices.
Barclays has been a target of criticism in recent weeks for its involvement in two separate unlawful actions.
Last week, Barclays disclosed that the bank is facing a criminal investigation by UK's Serious Fraud Office (SFO) into payments made to Qatar's sovereign wealth fund in connection with its fund raising programme in 2008. (See: Barclays Plc faces probe over Qatar payments)
The lender raised £5 billion from investors in the Middle East including Qatar Holding LLC and Abu Dhabi Investment Authority in a bid to save the bank from the looming global financial crisis.
Earlier in June, the US and the UK regulators imposed a fine of £290 million on the British bank for manipulating the London interbank offered rates (Libor) and Euro interbank offered rate (Euribor) during the four-year period starting from 2005. (See: Barclays fined $452 million for Libor, Euribor manipulations)
The matter is also believed to be under investigation by the SFO. The bank's chief executive Bob Diamond and two other senior officials resigned as the scandal flared-up.
With regard to the latest controversy, WDM's policy and campaigns officer Christine Haigh told The Independent that Barclays behaviour risks fuelling speculative bubble and contributing to hunger and poverty for millions of the world's poorest people.
In its recent Food Price Watch, the World Bank reported a sharp 10-per cent rise in July food prices due to drought in the US and Eastern Europe and urged governments to take steps to protect the most affected people. (See: Food prices surge as drought hits US, Eastern Europe).