Decision Notice
On , the Financial Conduct Authority issued a Decision Notice to Mr David Edward Weller
DECISION NOTICE
To:
Mr David Edward Weller
Individual
Reference
Number:
DXW01275
1.
ACTION
1.1.
For the reasons given in this Notice, the Authority has decided to:
1.1.1. impose on Mr David Edward Weller a financial penalty of £54,000 pursuant
to section 66 of the Act; and
1.1.2. make an order, pursuant to section 56 of the Act, prohibiting Mr Weller from
performing any function in relation to any regulated activity carried on by
any authorised or exempt person, or exempt professional firm.
2.
SUMMARY OF REASONS
2.1.
During the Relevant Period, Mr Weller played a key role in the creation of a
document, namely the Presentation, which contained obviously improper advice for
potential investors by recommending manipulating trading strategies, including
This Decision Notice has been referred to the Upper
Tribunal by Mr David Rowland, exercising third party
rights, which will determine whether to dismiss the
reference or remit it to the FCA with a direction to
reconsider and reach a decision in accordance with the
findings of the Upper Tribunal. Therefore, the findings
outlined in this Decision Notice are provisional in that
they reflect the FCA’s belief as to what occurred and
how it considers the behaviour described should be
characterised. Mr Weller has not referred this Decision
Notice to the Upper Tribunal.
The Upper Tribunal’s decision will be made public on its
website.
recommending conduct which could be a criminal offence, had it taken place in the
UK. At the time, Mr Weller was a senior manager in the Firm.
2.2.
The Presentation set out the Strategy. The Strategy comprised a multi-faceted
approach that included conduct aimed at creating a false or misleading impression
as to the market in, or the price of, Qatari bonds, with the objective of harming the
economy of Qatar. Creating a false or misleading impression as to the market in,
or the price of, Qatari bonds would be an extremely serious matter and potentially
a criminal offence, if it were to take place in the UK (contrary to section 90 of the
Financial Services Act 2012). Section 1H of the Act provides that an offence
involving such misconduct amounts to “financial crime” for the purpose of the Act.
2.3.
The Strategy included regulated advice (pursuant to article 53 of the Regulated
Activities Order and section 22(1) of the Act) aimed at the UAE and/or other states
in the Middle East region because it advised those potential investors to transfer
their existing holdings of Qatari bonds into a “protected cell company” to “preserve
integrity” before manipulative trading intended to destabilise the Qatari economy
took place, which trading was to include the purchase of CDS and the sale and
purchase of Qatari bonds.
2.4.
Mr Weller assisted other employees of the Firm in the drafting of the Presentation,
knowing that there was a material risk it would be disseminated for purposes that
included marketing the Firm’s services to potential investors (namely
representatives of the UAE and/or other states in the Middle East region, who Mr
Weller knew others in the Firm believed might have reasons to want to put
economic pressure on Qatar).
2.5.
The Presentation signalled to potential clients that the Firm was willing to facilitate
manipulative trading. The Authority considers it particularly serious that Mr Weller,
as a person who held a position of significant influence within an authorised firm,
provided a more junior staff member with ideas as to how to draft the Presentation.
2.6.
By virtue of the misconduct described in this Notice, Mr Weller failed to act with
integrity in breach of Individual Conduct Rule 1 (COCON 2.1.1R) and demonstrated
that he is not a fit and proper person to perform any function in relation to any
regulated activities.
2.7.
The Authority has decided to (i) impose on Mr Weller a financial penalty of £54,000
pursuant to section 66 of the Act, and (ii) make an order prohibiting Mr Weller from
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performing any function in relation to any regulated activities carried on by any
authorised or exempt person, or exempt professional firm pursuant to section 56
of the Act.
3.
DEFINITIONS
3.1.
The definitions below are used in this Notice:
“the Act” means the Financial Services and Markets Act 2000;
“the Authority” means the Financial Conduct Authority;
“CDS” means credit default swap;
“COCON” means Code of Conduct in the Authority’s Handbook;
“Currency Peg” means a policy in which a national government sets a specific fixed
exchange rate for its currency with a foreign currency or a basket of currencies;
“DEPP” means the Decision Procedure and Penalties Manual, part of the Authority’s
Handbook of Rules and Guidance;
“EG” means the Authority’s Enforcement Guide set out in the Authority’s Handbook;
“the Financial Institution” means a financial institution being established through a
partnership of an Abu Dhabi sovereign wealth fund and the Rowland Family before,
and during, the Relevant Period. It was not a project of the Firm;
“the Firm” means Banque Havilland SA;
“Head Office” means the head office of the Firm in Luxembourg;
“the Indian Article” means an article regarding the Presentation published by an
Indian media organisation called the Business Standard, entitled “Gulf Crisis may
affect Qatar’s security, India’s economic interests” on 12 October 2017;
“Individual A” means the individual engaged by the Firm to market its services in
the UAE and the wider Middle East region;
“the Intercept” means a media organisation called The Intercept.com;
“the Intercept Article” means an article regarding the Presentation published by the
Intercept on 9 November 2017;
“London Branch” means the branch of the Firm based in London;
“MLRO” means Money Laundering Reporting Officer;
“Mr Rowland” means Edmund Lloyd Rowland;
“PERG” means the Perimeter Guidance Manual in the Authority’s Handbook;
“the Presentation” means the document drafted by the Firm setting out a series of
steps which could be taken to harm the economy of Qatar, by using manipulative
trading practices aimed at creating a false or misleading impression as to the
market in or the price of Qatari bonds;
“the Regulated Activities Order” or “the RAO” means the Financial Services and
Markets Act 2000 (Regulated Activities) Order 2001;
“the Relevant Period” means the period from 13 September 2017 to 13 November
2017;
“the Rowland Family” means the family of David Rowland;
“the SFNH Document” means a document created by David Edward Weller on 14
September 2017 entitled “Setting Fire to the Neighbour’s House fund” setting
out details of a series of steps to devalue the Qatari Riyal by increasing and
encouraging selling pressure;
“the Strategy” means the series of steps as set out in the Presentation which could
be taken to harm the economy of Qatar by using manipulative trading practices
aimed at creating a false or misleading impression as to the market in or the price
of Qatari bonds;
“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber);
“UAE” means United Arab Emirates;
“Warning Notice” means the Warning Notice given to Mr Weller dated 14 October
2021; and
“Wash Trade” means a sale or purchase of an instrument where there is no change
in beneficial interest or market risk, or where the transfer of beneficial interest or
market risk is only between parties acting in concert or collusion, other than for
legitimate reasons.
4.
FACTS AND MATTERS
Mr Weller and the Firm
4.1.
The Firm was established in 2009 by the Rowland Family and described itself,
during the Relevant Period, on its website “as being managed with the financial
conservatism which is the family’s hallmark”. The Firm’s head office is in
Luxembourg. It has various branch offices, including one in London. The Firm was
also described on its website as “an integral part of the [Rowland] Family’s interests
on both a professional and personal level”.
4.2.
During the Relevant Period, Mr Weller was the Head of Asset Management at the
London Branch and was approved by the Authority to carry out the EEA branch
senior manager function (“SMF21”) at the Firm. Those holding SMF21 are
employees who have significant responsibility for one or more significant business
units of a branch of an incoming EEA firm in the UK. Mr Weller’s specific role was
as Head of Asset Management. He reported to Mr Rowland (see below) and to the
Firm’s Group Head of Asset Management.
4.3.
The key individuals involved in this matter were employees in the London Branch,
namely Mr Weller, Mr Rowland and Vladimir Bolelyy. During the Relevant Period:
4.3.1.
Mr Rowland was approved by the Authority as SMF21. He was Chief
Executive of the Firm’s London Branch for almost three years before
stepping down in April 2017, after which he retained his SMF21 status.
He was formally re-appointed as Chief Executive on 26 September 2017
(part way through the Relevant Period) and continued in this role until
his resignation on 13 December 2017. Throughout the Relevant Period
Mr Rowland was more senior than Mr Weller.
4.3.2.
Mr Bolelyy was employed by the Firm as a senior investment analyst and
was Mr Rowland’s assistant reporting directly to him.
4.4.
Throughout the Relevant Period, Mr Weller, Mr Rowland and Mr Bolelyy were
employed by, and received salary from, the Firm only.
Marketing in the UAE
4.5.
On 18 April 2017, the Firm engaged the services of Individual A to provide
“consulting and professional assistance in developing Banque Havilland in the
United Arab Emirates”. His professional assistance was defined as to expand “the
undertaking of Banque Havilland in the UAE and broader Middle East, with specific
assistance in terms of strategic marketing, local networking or anything else which
will be agreed by the Parties as useful to serve the present purpose”. Individual A
was paid a monthly fee of USD 10,000 for these services. In addition to this
consultancy role, Individual A was also a special adviser to the Crown Prince of Abu
Dhabi (Abu Dhabi is the capital of the UAE).
The Qatar diplomatic crisis
4.6.
In June 2017, as was widely reported in the press, a Saudi-led coalition of Gulf
states (including the UAE) severed diplomatic relations with Qatar, citing Qatar’s
alleged support for terrorism as the main reason. The Qatari Riyal had a currency
peg with the US Dollar throughout the Relevant Period.
30 August 2017 meeting
4.7.
On 30 August 2017, at a meeting organised by Individual A, Mr Rowland and David
Rowland (Mr Rowland’s father and the ultimate controller of the Firm) met with a
senior representative of a UAE sovereign wealth fund. Prior to that meeting, on 27
August 2017, Mr Rowland had referred to the forthcoming meeting and stated to a
colleague: “they have another potential opportunity they want me to look at also”.
Mr Rowland told the Authority during an interview that at this meeting it was made
clear to him, in the absence of David Rowland, that the UAE sovereign wealth fund’s
representatives were concerned about the substantial exposure that Emirati banks
had in the interbank market to Qatar and particularly to the local banking sector.
This was due to the situation between Qatar and the UAE and the representatives’
fears that the stand-off would be significantly extended as no rapprochement
seemed to be on the horizon. This was a reference to the political tensions in that
region which had worsened since June 2017.
The Presentation
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4.8.
At some point after the 30 August 2017 meeting and no later than 12 September
2017, Mr Rowland tasked Mr Bolelyy with preparing a written presentation as to
how economic pressure might be put on Qatar. Subsequently, on 12 September
2017 Mr Bolelyy sent himself an email recording the following matters in a number
of bullet points, all of which he then included in the first draft: “Bond exposure;
What natters [sic] is western view; Foreign reserves; Currency peg break; Cash to
pay for insurance; “Sanctions don’t work unless everyone is doing it”; Currency peg
pressure is effective when thought by everyone; Avoid jargon; Segregated vehicle”.
4.9.
The first draft of the document which became the Presentation, prepared by Mr
Bolelyy on 12 September 2017 in the form of slides, was named “Qatar
Opportunity” and proposed a series of steps with the purpose of devaluing the
Qatari Riyal and breaking its peg to the US dollar.
13 September 2017 meeting
4.10. On the following day, 13 September 2017, a meeting was convened at short notice
of various individuals in the London Branch; these individuals were Mr Weller, Mr
Rowland, Mr Bolelyy, another employee of the Firm and an individual not employed
by the Firm.
4.11. At the meeting, which appears to have lasted for about a quarter of an hour and
was subsequently described by Mr Weller as a brain-storming session, Mr Rowland
asked for ideas on how negatively to impact the Qatari economy by undermining
the value of the country’s currency. Mr Rowland explained that Saudi Arabia, Abu
Dhabi [sic] and Egypt were keen as nation states to persuade Qatar to stop some
of its funding activities. He further explained that the 3 countries had a combined
$23 billion of Qatari assets that they were prepared to use to pressure the Qatari
Riyal. Mr Rowland went on to state that the potential economic interest for the
Rowland family would come from being able to charge a small fee on the
assets which would be transferred to a vehicle arranged by the Rowland family.
4.12. The Authority infers that Mr Weller understood there was a material risk that the
Presentation would be presented to representatives of the UAE and/or other states
in the Middle East region which Mr Rowland considered might have reasons to want
to put economic pressure on Qatar, and Mr Weller understood that Mr Rowland was
motivated by the potential to earn fees for Rowland Family interests which included
the Firm. Regardless of whether the Strategy as set out in the Presentation was
practicable or likely to be accepted by such representatives, the Authority concludes
that it was a way of signalling to potential clients that the Firm was willing to
countenance improper market conduct in order to advance their interests.
4.13. Following this meeting, none of the attendees raised any concerns with the Firm’s
MLRO or to any other senior manager. In addition, no concerns were raised to Head
Office or via the Firm’s whistle-blowing procedures.
Iterations of the Presentation
4.14. Later that day, 13 September 2017, Mr Bolelyy emailed the attendees of the earlier
meeting to request their “credible, high-level ideas re: a possible transaction
structure” and asked that they “jot something coherent down.” . He explained that
what he described as the “winning idea” would go into a presentation, the drafting
of which he would take care of, and that it would be shared and discussed at a
“high level”, which the Authority infers meant at least Mr Rowland, who was copied
into this request.
4.15. On 14 September 2017, Mr Bolelyy emailed a draft of the Presentation to Mr
Rowland and stated as follows: “Attached is a work in progress based on fragments
of information exchanged so far. As discussed yesterday, it will be useful for all of
us to sit down and nail down the basic skeleton. When can you do today?”.
4.16. This version of the Presentation included further details of the Strategy specifically
regarding the stated aim of putting pressure on the Qatari Riyal to such an extent
that the Qatar National Bank would need to deploy significant portions of Qatar’s
foreign exchange reserves to maintain its value in relation to the US Dollar.
4.17. This version of the Presentation also explicitly stated that “maintaining the
[currency] peg requires extensive use of central bank foreign exchange reserves.
Existing G$15bn [sic] of Qatari bonds represent close to 50% of all central bank
reserves available” and noted that “the selling pressure [generated by the Strategy]
creates upward pressure on the Qatari Riyal-US Dollar peg and forces Qatar
National Bank to defend it by decreasing available foreign exchange reserves”.
4.18. The Presentation envisaged the purchasing of Qatari bonds, deployment of long
CDS and long credit forwards with the express aim of negatively impacting the
value of the Qatari Riyal against the US Dollar.
4.19. Later on 14 September 2017, in response to Mr Bolelyy’s previous request for
contributions to what he described as ‘a possible transaction structure’, and in the
knowledge that Mr Bolelyy was seeking “credible” and “coherent” ideas to go into
a presentation to be discussed at a “high level”, Mr Weller emailed a document to
Mr Bolelyy which contained his ideas, without expressing any reservations about
his contribution being disseminated more widely or presented as coherent or
credible. The document was entitled “Setting Fire to the Neighbour’s House fund”
(“the SFNH Document”) and set out more details of the Strategy, namely, to
devalue the Qatari Riyal by increasing and encouraging selling pressure. The SFNH
Document ended with a cartoon depicting Qatar and the statement “Repeat as
desired”. Mr Weller has subsequently stated that the SNFH Document reflected
what had been discussed amongst the participants at the meeting on the previous
day, together with some research he had conducted through open sources on the
internet. In addition, he stated that he did not regard the contents of the SFNH
Document as representing a serious proposal and that it was simply reflective of a
subject Mr Rowland wished to explore.
4.20. The steps set out in the SFNH Document proposed to “[q]uietly pick up some Qatar
paper”, or bonds “2026s and 2030s”, using “old school account painting” to “get
some ownership” which would be used to “[c]ontrol the yield curve” by co-operating
parties “acting in concert” trading back and forth at incrementally lower prices. The
final step in this stage would be to “dump” these holdings on the open market,
driving the bond “price further down and [to be then] picked back up [by] the
original seller”.
4.21. Following this, the plan was to “[e]stablish positions in Forwards on Riyal, options
where possible”, (…) “get long the CDS slowly with larger houses, just enough to
move the price to make it news worthy”.
4.22. Next, “[f]ire up the PR machine… to remind people there is [a] problem with
Qatar…”. A further increase of the CDS position was advised and then, “PR wave
two” stating that “despite the massive SWF [sovereign wealth fund] pressure is
building that could see Qatar having restricted access to Dollar… [and] credit rating
may be affected with the long-term future of the country now in doubt… Peg won’t
break, though credit markets will be looking shambolic…Once fire fully alight clear
out the [UAE Dirham] specs for a profit”.
4.23. Accordingly, the SFNH Document proposed a way in which the Qatari Riyal/US
Dollar currency peg might be attacked. In summary, the SFNH Document
suggested a series of steps namely: (1) building up a portfolio of specific Qatari
debt without attracting attention by parties acting in concert in a series of Wash
Trades, (2) later dumping the position in order to create a false impression in the
market of a flight from Qatari debt, (3) opening a CDS position on the debt (bonds)
and then ‘dumping’ the said debt to drive the price down (4) increasing and closing
the CDS position in order to add negative pressure on Qatari
assets/currency/economy, to profit from the manipulative bond trading, and
increasingly stressed markets, and (5) using a PR campaign deliberately magnifying
the false impression to increase selling of the Qatari Riyal or Qatari bond holdings
and encourage other market participants to do likewise.
4.24. In the evening of 14 September 2017, Mr Bolelyy took most of the content from
the SFNH Document and added it to the draft Presentation, including the content
set out in the bullet points in the paragraph below.
4.25. Thereafter until 18 September 2017 Mr Bolelyy actively worked on the Presentation.
At some point during this period Mr Weller looked at enough of the then current
draft of the document to correct a typographical error. This was yet another
opportunity for him (as an SMF 21) to warn Mr Bolelyy that the obviously improper
content taken from the SFNH Document should not be disseminated more widely
(including outside the Firm) or presented as coherent or credible, but Mr Weller did
not do so. The final form of the Presentation was entitled “Distressed Countries
Fund” and set out in detail the Strategy, which included the following:
•
“To preserve integrity of existing Qatari bond holdings, an in-situ transfer will
be arranged into a protected cell company”;
•
“Gear up to control the yield (and thus bond prices)” by purchasing “medium
and long-term Qatar paper”, as it “should favourably affect CDS pricing at later
stage”;
•
“Establish a crossing transaction arrangement whereby another affiliated party
sells the same bond holdings back to the original seller and thereby creates
additional downward pressure”;
•
“Purchase CDS on Qatar (…) to move the price sufficiently to make it
newsworthy”;
•
“Fire up the PR Machine to remind people there is a problem with Qatar”;
•
“Increase the positions”, by “buying additional CDS” to lead to “falling of bond
price, raising rates, and escalation in CDS premia”;
•
“Refresh the PR message to add more fuel to the fire”, as it will “focus on the
prospect of restricted access to US Dollar and now-doubtful stability of the
country;
•
“FIFA Option…Qatar has committed to $200BN of spending for its hosting of
2022 World Cup…negative publicity can resurface around the original award of
the tournament…If Qatar now spends its reserves on protecting the currency
and domestic credit markets, there is less dry powder to fund the infrastructure
spending”.
4.26. The finalised Presentation therefore outlined how to impact the economy of Qatar
negatively through manipulative trading practices, including direct reference to
crossing transactions between two parties working in conjunction with the stated
aim of artificially driving down the price of Qatari government-backed bonds,
therefore weakening Qatar financially, in other words Wash Trades. The Strategy
included a coordinated PR strategy designed to increase the pressure placed upon
Qatar in addition to the existing sanctions and force the Qatari government to utilise
its central bank foreign exchange reserves to maintain the currency peg between
the Qatari Riyal and the US Dollar. All of which were key concepts set out by Mr
Weller in the SFNH Document. As such the Presentation clearly contemplated
manipulative trading which aimed to create a false or misleading impression as to
the market in or the price of Qatari bonds which, if conducted in the UK could
amount to a criminal offence (contrary to section 90 of the Financial Services Act
2012).
What then happened to the Presentation
4.27. On 18 September 2017, in preparation for a scheduled visit to Abu Dhabi by Mr
Rowland, David Rowland and Mr Bolelyy, Mr Bolelyy emailed a copy of the
Presentation to his personal email account and, at Mr Rowland’s request, printed
two copies for Mr Rowland to take with him to Abu Dhabi.
4.28. Following a request from Mr Rowland to send him a soft copy of “the Qatar
presentation in the morning”, Mr Bolelyy also emailed him the final version of the
Presentation at approximately 7pm on 18 September 2017. Mr Bolelyy informed Mr
Rowland that it was the latest version and the same as Mr Bolelyy had given him
that afternoon for review.
4.29. Mr Rowland immediately forwarded the Presentation to Individual A, with whom he
had had a meeting at the Firm’s London Branch five days earlier. He also forwarded
a copy of the Presentation to David Rowland.
4.30. Mr Rowland explained in interview with the Authority that he requested Mr Bolelyy
to print copies of the Presentation “because it was related to the UAE” and
confirmed that the Abu Dhabi trip was an opportunity potentially to discuss the
Presentation with senior individuals, including from an Abu Dhabi sovereign wealth
fund. During the trip, Mr Bolelyy provided a copy of the Presentation to an employee
of this Abu Dhabi sovereign wealth fund.
4.31. For an authorised firm to contemplate such a course of action (including
recommending conduct which could be a criminal offence if it took place in the UK),
intending it to be presented to potential investors indicates a clear lack of integrity.
This is regardless of whether the Strategy set out in the Presentation was
achievable in reality (either by the Firm or by potential investors or recipients of
the Presentation). Mr Weller knowingly made significant contributions to the
Presentation’s creation.
Press reports and the Firm’s response
4.32. Mr Rowland, David Rowland and Mr Bolelyy visited Abu Dhabi from 21 to 25
September 2017. The Presentation was later reported in the media to have reached
the email inbox of the UAE Ambassador to the US between 18 September and 12
October 2017 and was said to have been stored under the heading “Rowland
Banque Havilland”. The UAE Ambassador to the US subsequently stated to the
Firm’s legal advisers in New York (through his own legal advisers) that he “did not
receive the Presentation”. The Presentation eventually became publicly available
on the internet (see below).
4.33. On 12 October 2017, as part of a pattern of sending press reports regarding Qatar
to the attendees of the 13 September 2017 meeting, Mr Weller discovered an article
by an Indian media organisation called the Business Standard, entitled “Gulf Crisis
may affect Qatar’s security, India’s economic interests” (“the Indian Article”).
4.34. The Indian Article referred to leaked or stolen emails from the Firm allegedly found
in the in-box of the UAE Ambassador to the US. The article claimed that these
emails revealed an “economic warfare strategy” which involved “setting up a
confidential commercial entity with sizeable size to buy certificate of deposits (CDs)
of Qatari banks, then selling the CDs back to original sellers at a lower price,
thereby reducing the market pricing. Negative global public relations campaign is
done, showing instability in Qatar as a key reason for this downward pressure on
CDs pricing. This will ultimately either force Qatar’s financial ministry to either
break the currency peg, or at least spend a lot of dollar reserves to maintain their
pricing when panic initiates global buyers to sell Qatari Riyal.” The article stated
that ”David Rowland (…) could be serving UAE’s interests in the ongoing spat. He
is the man behind the meteoric rise of Banque Havilland…”.
4.35. At 12.35pm on 12 October 2017 Mr Weller emailed a link to the Indian Article to
Mr Rowland, who had by then resumed his position as Chief Executive of the London
Branch. Mr Rowland responded shortly afterwards with “made me laugh”.
4.36. At 3.02pm, Mr Weller sent a further email to Mr Rowland saying, “trending on Qatari
twitter as I type” with an image from the social media site, Twitter, showing the
following: “#UAE targeted #Qatar’s Economy using… Rowland’s Banque Havilland
amid #GulfCrisis…”.
4.37. Neither Mr Weller nor Mr Rowland forwarded either email to the Firm’s Compliance
officer, or to the Head Office, or took any other steps to inform other senior
management of the allegations. In addition, neither individual, nor anyone else at
the Firm, informed the Authority of these concerns.
4.38. On 9 November 2017, the Intercept published the Intercept Article stating that the
Presentation had been found in the inbox of the UAE Ambassador to the US and
providing copies of some of the Presentation slides. The article was titled “Leaked
Documents Expose Stunning Plan To Wage Financial War On Qatar (…)” and
explained that “economic warfare involved an attack on Qatar’s currency using
bond and derivatives manipulation….The outline, prepared by Banque Havilland,
(…) laid out a scheme to drive down the value of Qatar’s bond and increase the
cost of insuring them, with the ultimate goal of creating a currency crisis that would
drain the country’s cash reserves”.
4.39. The content of the pages featured in the Intercept Article, including the content
from Mr Weller’s SFNH document, were identical to the Presentation as sent by the
Firm to Individual A and David Rowland on 18 September 2017. The Intercept
Article identified Mr Bolelyy as the creator of the Presentation, according to the
metadata of the document obtained by the Intercept.
4.40. The publication of the Intercept Article led to the immediate resignation of Mr
Bolelyy on 9 November 2017, and an internal investigation was initiated by Head
Office on 13 November 2017.
4.41. The Firm, via Mr Rowland, contacted the Authority on 14 November 2017 by
telephone, providing limited information regarding the events referred to above
and the involvement of the Firm. This was followed up by an email from Mr Rowland
to the Authority on 15 November 2017 noting what was said in the call, as follows:
“1. An article mentioning a junior analyst name [sic] for the creation of a non bank
presentation. 2. A forensic investigation being held. 3. The groups [sic] regulator
CSSF was informed. 4. The PR firm the group uses has clarified the facts. 5. We
will share the findings of the investigation once complete subject to CSSF approval”.
4.42. On 13 December 2017 Mr Rowland resigned as an employee, Chief Executive of the
London Branch and member of the executive management of the Firm with
immediate effect, and Mr Weller left the Firm on 10 April 2018.
5.
FAILINGS
5.1.
The statutory and regulatory provisions relevant to this Notice are referred to in
Individual Conduct Rule 1: You must act with integrity
5.2.
Individual Conduct Rule 1 required Mr Weller to act with integrity in relation to the
performance by him of functions relating to the carrying on of activities (whether
or not regulated activities) by the Firm. During the Relevant Period, Mr Weller
breached this requirement, whilst acting as an approved senior manager of the
London Branch (SMF21) by contributing to the creation of the Presentation
(via the SFNH Document) with a series of steps that recommended engaging in
obviously improper conduct.
5.3.
Mr Weller failed to act with integrity because both the SFNH Document (which Mr
Weller drafted and provided to Mr Bolelyy) and the Strategy set out a multi-faceted
approach that included conduct aimed at creating a false or misleading impression
as to the market in or the price of Qatari bonds, with the objective of harming the
economy of Qatar. Mr Weller acted recklessly in making a significant contribution
to the Presentation in circumstances where he was aware that there was a material
risk that the Presentation would be disseminated for purposes that included
marketing the Firm’s services to potential investors (namely representatives of the
UAE and/or other states in the Middle East region, who Mr Weller knew others in
the Firm believed might have reasons to want to put economic pressure on Qatar).
In particular, he was aware that Mr Rowland hoped the Presentation would generate
fees for Rowland Family interests. Accordingly, in the circumstances known to Mr
Weller, it was unreasonable for him to take this risk.
Not Fit and Proper
5.4.
The Authority considers that Mr Weller’s actions as described in this Notice
demonstrate that he lacks fitness and propriety because he lacks integrity.
6.
SANCTION
Financial penalty
6.1.
The Authority’s policy for imposing a financial penalty is set out in Chapter 6 of
DEPP. DEPP 6.5B sets out the details of the five-step framework that applies in
respect of financial penalties imposed on individuals in non-market abuse cases.
Step 1: disgorgement
6.2.
Pursuant to DEPP 6.5B.1G, at Step 1 the Authority seeks to deprive an individual
of the financial benefit derived directly from the breach where it is practicable to
quantify this.
6.3.
The Authority has not identified any financial benefit that Mr Weller derived directly
from his breach.
6.4.
Step 1 is therefore £0.
Step 2: the seriousness of the breach
6.5.
Pursuant to DEPP 6.5B.2G, at Step 2 the Authority determines a figure that reflects
the seriousness of the breach. That figure is based on a percentage of the
individual’s relevant income. The individual’s relevant income is the gross amount
of all benefits received by the individual from the employment in connection with
which the breach occurred, and for the period of the breach.
6.6.
As Mr Weller’s breach lasted less than 12 months, the relevant income will be that
earned by him in the 12 months preceding the last day of his breach, being 13
November 2017. The Authority considers Mr Weller’s relevant income for this
period to be £200,000.
6.7.
In deciding on the percentage of the relevant revenue that forms the basis of the
Step 2 figure, the Authority considers the seriousness of the breach and chooses a
percentage between 0% and 40%. This range is divided into five fixed levels which
represent, on a sliding scale, the seriousness of the breach; the more serious the
breach, the higher the level. For penalties imposed on individuals in non-market
abuse cases there are the following five levels:
Level 1 – 0%
Level 2 – 10%
Level 3 – 20%
Level 4 – 30%
Level 5 – 40%
6.8.
In assessing the seriousness level, the Authority has taken into account various
factors which reflect the impact and nature of the breach, including that he held a
senior position in the Firm and assisted a more junior members of staff (Mr Bolelyy)
in committing a breach; and whether it was committed deliberately or recklessly.
6.9.
DEPP 6.5B.2G(11) lists factors tending to show the breach was reckless. Of those,
the Authority considers the following factor to be the most relevant:
6.9.1.
Mr Weller appreciated there was a risk that his actions in making a
significant contribution to the Presentation could result in a breach and
he failed adequately to mitigate that risk.
6.10. DEPP 6.5B.2G(12) lists factors which are likely to be considered ‘level 4 or 5
factors’. Of these, the Authority considers the following factors to be most relevant:
6.10.1.
Mr Weller knew there was a material risk the Presentation would be used
to encourage conduct which potentially could be a criminal offence, and
financial crime, were it to take place in the UK;
6.10.2.
Mr Weller failed to act with integrity; and
6.10.3.
the breach was committed recklessly.
6.11. DEPP 6.5B.2G(13) lists factors likely to be considered ‘level 1, 2 or 3 factors’. Of
these, the Authority considers the following factor to be relevant:
6.11.1.
Mr Weller made no profit as a result of the breach.
6.12. Taking all of these factors into account, the Authority considers the seriousness of
the breach to be level 4 and has determined that the appropriate Step 2 figure is
30% of £200,000.
6.13. Step 2 is therefore £60,000.
Step 3: mitigating and aggravating factors
6.14. Pursuant to DEPP 6.5B.3G, at Step 3 the Authority may increase or decrease the
amount of the financial penalty arrived at after Step 2, but not including any
amount to be disgorged as set out in Step 1, to take into account factors which
aggravate or mitigate the breach.
6.15. The Authority considers that there were no aggravating factors to the breach.
6.16. The Authority consider that the following factor mitigates the breach:
6.16.1.
The degree of co-operation Mr Weller showed during the investigation of
the breach by the Authority.
6.17. Having considered this factor, the Authority considers that the Step 2 figure should
be subject to a 10% discount at Step 3. This decreases the figure at Step 3 to
£54,000.
Step 4: adjustment for deterrence
6.18. Pursuant to DEPP 6.5B.4G, if the Authority considers the figure arrived at after Step
3 is insufficient to deter the individual who committed the breach, or others, from
committing further or similar breaches, then the Authority may increase the
penalty.
6.19. The Authority considers that the Step 3 figure of £54,000 is sufficient in relation to
the breaches to meet its objective of credible deterrence.
6.20. Step 4 is therefore £54,000.
Step 5: settlement discount
6.21. Pursuant to DEPP 6.5B.5G, if the Authority and the individual on whom a penalty is
to be imposed agree the amount of the financial penalty and other terms, DEPP 6.7
provides that the amount of the financial penalty which might otherwise have been
payable will be reduced to reflect the stage at which the Authority and the individual
reached agreement.
6.22. Mr Weller and the Authority did not reach an agreement so no discount applies to
the Step 4 figure. The Step 5 figure is therefore £54,000.
6.23. The Authority has therefore decided to impose a total financial penalty of £54,000
on Mr Weller for breaching Individual Conduct Rule 1 (COCON 2.1.1R).
6.24. As stated above the Authority considers that Mr Weller’s actions as described in this
Notice demonstrate that he lacks fitness and propriety because he lacks integrity.
As such, the Authority believes that it is appropriate to prohibit Mr Weller from
performing any function in relation to any regulated activity carried on by any
authorised person, exempt person or exempt professional firm.
7.
REPRESENTATIONS
7.1.
Annex B contains a brief summary of the key representations made by Mr Weller,
and by David Rowland as a third party, in response to the Warning Notice and how
they have been dealt with. In making the decision which gave rise to the obligation
to give this Notice, the Authority has taken account of all of the representations
made by Mr Weller, and by David Rowland as a third party, whether or not set out
in Annex B.
8.
PROCEDURAL MATTERS
8.1.
This Notice is given under sections 57 and 67 of the Act and in accordance with
section 388 of the Act.
Decision maker
8.2.
The decision which gave rise to the obligation to give this Notice was made by the
RDC. The RDC is a committee of the Authority which takes certain decisions on
behalf of the Authority. The members of the RDC are separate to the Authority staff
involved in conducting investigations and recommending action against firms and
individuals. Further information about the RDC can be found on the Authority’s
committee-rdc
The Tribunal
8.3.
Mr Weller has the right to refer the matter to which this Notice relates to the
Tribunal. Under paragraph 2(2) of Schedule 3 of the Tribunal Procedure (Upper
Tribunal) Rules 2008, Mr Weller has 28 days from the date on which this Notice is
given to him to refer the matter to the Tribunal. A reference to the Tribunal is made
by way of a signed reference notice (Form FTC3) filed with a copy of this Notice.
The Tribunal’s contact details are: Upper Tribunal, Tax and Chancery Chamber,
Fifth Floor, Rolls Building, Fetter Lane, London EC4A 1NL (tel: 020 7612 9730;
email: fs@hmcts.gsi.gov.uk).
8.4.
Further information on the Tribunal, including guidance and the relevant forms to
complete, can be found on the HM Courts and Tribunal Service website:
8.5.
A copy of Form FTC3 must also be sent to the Authority at the same time as filing
a reference with the Tribunal. A copy should be sent to Victoria Chaloyard at the
Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.
8.6.
Once any such referral is determined by the Tribunal and subject to that
determination, or if the matter has not been referred to the Tribunal, the Authority
will issue a final notice about the implementation of that decision.
Access to evidence
8.7.
Section 394 of the Act applies to this Notice.
8.8.
The person to whom this Notice is given has the right to access:
(1) the material upon which the Authority has relied in deciding to give this
Notice; and
(2) the secondary material which, in the opinion of the Authority, might
undermine that decision.
Third party rights
8.9.
A copy of this Notice is being given to David Rowland as a third party identified in
the reasons above and to whom in the opinion of the Authority the matter to which
those reasons relate is prejudicial. As a third party, David Rowland has similar
rights to those mentioned in paragraphs 8.3 and 8.8 above in relation to the
matter which identifies him.
Confidentiality and Publicity
8.10. This Notice may contain confidential information and should not be disclosed to a
third party (except for the purpose of obtaining advice on its contents). In
accordance with section 391 of the Act, a person to whom this Notice is given or
copied may not publish the Notice or any details concerning it unless the Authority
has published the Notice or those details.
8.11. However, the Authority must publish such information about the matter to
which a Decision Notice or Final Notice relates as it considers appropriate. The
persons to whom this Notice is given or copied should therefore be aware that
the facts and matters contained in this Notice may be made public.
Authority Contacts
8.12. For more information concerning this matter generally, contact
Victoria Chaloyard at the Authority: direct line: 020 7066
3108/email: victoria.chaloyard@fca.org.uk.
Chair, Regulatory Decisions Committee
ANNEX A
RELEVANT STATUTORY PROVISIONS
1.1.
The Authority’s operational objectives, set out in section 1B(3) of the Act, include
the integrity objective of protecting and enhancing the integrity of the UK financial
system which includes it not being used for a purpose connected with financial
crime.
1.2.
Section 56 of the Act provides that the Authority may make a prohibition order if it
appears to the Authority that an individual is not a fit and proper person to perform
functions in relation to a regulated activity carried on by an authorised person,
exempt person, or a person to whom, as a result of Part 20, the general prohibition
does not apply in relation to that activity. Such an order may relate to a specified
regulated activity, any regulated activity falling within a specified description, or all
regulated activities.
1.3.
Section 66 of the Act provides that the Authority may take action against a person
if it appears to the Authority that he is guilty of misconduct and the Authority is
satisfied that it is appropriate in all the circumstances to take action against him.
1.4.
Section 66A of the Act provides that for the purposes of action by the Authority
under section 66, a person is guilty of misconduct if any of conditions A to C is met
in relation to the person. Section 66A(2) sets out Condition A, which during the
Relevant Period stated that:
‘(a) the person has at any time failed to comply with rules made by the FCA under
section 64A, and
(b) at that time the person was –
(i) an approved person,
(ii) an employee of a relevant authorised person, or
(iii) a director of an authorised person.’
1.5.
Section 66(3)(a) and (b) of the Act provides that if the Authority is entitled to take
action against a person under section 66, it may impose a penalty on him of such
amount as it considers appropriate, or publish a statement of his misconduct.
1.6.
Section 1H of the Act provides:
“(3)
“Financial crime” includes any offence involving
(a) fraud or dishonesty,
(b) misconduct in, or misuse of information relating to, a financial market.
(4) “Offence” includes an act or omission which could be an offence if it had taken
place in the United Kingdom.”
1.7
Section 90 of the Financial Services Act 2012 provides that:
“(1) a person (“P”) who does any act or engages in any course of conduct which
creates a false or misleading impression as to the market in or the price or
value of any relevant investments commits an offence if—
(a)
P intends to create the impression, and
(b)
the case falls within subsection (2) or (3) (or both).
(2)
The case falls within this subsection if P intends, by creating the impression,
to induce another person to acquire, dispose of, subscribe for or underwrite
the investments or to refrain from doing so or to exercise or refrain from
exercising any rights conferred by the investments.
(3)
The case falls within this subsection if—
(a)
P knows that the impression is false or misleading or is reckless as
to whether it is, and
(b)
P intends by creating the impression to produce any of the results in
subsection (4) or is aware that creating the impression is likely to
produce any of the results in that subsection.
(4)
Those results are—
(a)
the making of a gain for P or another, or
(b)
the causing of loss to another person or the exposing of another person
to the risk of loss.”
1.8
Article 53(1) of the Regulated Activities Order provided that advising a person is a
specified kind of activity if the advice is-
(a) given to the person in his capacity as an investor, or potential investor, or in
his capacity as agent for an investor or a potential investor; and
(b) advice on the merits of his doing any of the following (whether as principal or
agent)-
(i). buying, selling, subscribing for or underwriting a particular investment
which is a security, structured deposit or a relevant investment, or
(ii). exercising any right conferred by such an investment to buy, sell,
subscribe for or underwrite such an investment.
1.9
Section 22(1) of the Act provides that an activity is a regulated activity for the
purpose of the Act if it is an activity of a specified kind which is carried on by way
of business and (a) relates to an investment of a specified kind.
2.
RELEVANT REGULATORY PROVISIONS
2.1.
The Code of Conduct Sourcebook (COCON) was issued under section 64A of the
Act. COCON sets out the rules of conduct which apply to individuals within the scope
of COCON, which during the Relevant Period included SMF managers according to
COCON 1.1.2R(1).
2.2.
COCON 1.1.6R provides that in relation to ’a person (P) who is an approved person,
COCON applies to the conduct of P in relation to the performance by P of functions
relating to the carrying on of activities (whether or not regulated activities) by the
firm on whose application approval was given to P’.
Individual conduct rules
2.3.
Chapter 2 of COCON sets out the Individual Conduct Rules. COCON 2.1.1R
(individual Conduct Rule 1) provides that a person must act with integrity.
The Fit and Proper Test for Employees and Senior Personnel (“FIT”)
2.4.
The part of the Authority’s Handbook entitled “The Fit and Proper Test for Approved
Persons” sets out the criteria that the Authority will consider when assessing the
fitness and propriety of a candidate whom the firm is proposing to put forward for
approval as an FCA-approved SMF manager. FIT is also relevant in assessing the
continuing fitness and propriety of a person approved to perform the function of an
FCA-approved SMF manager.
2.5.
FIT 1.3.1G states that the Authority will have regard to a number of factors when
assessing the fitness and propriety of a person. In the Authority’s view, the most
important considerations will be the person’s honesty, integrity and reputation;
competence and capability; and financial soundness.
Enforcement Guide (“EG”)
2.6.
The Authority’s policy for exercising its power to make a prohibition order is set out
in Chapter 9 of EG.
2.7.
EG 9.1 states that the Authority may exercise this power where it considers that,
to achieve any of its regulatory objectives, it is appropriate either to prevent an
individual from performing any functions in relation to regulated activities or to
restrict the functions which he may perform.
Decision Procedure and Penalties Manual (“DEPP”)
2.8.
Chapter 6 of DEPP, which forms part of the Authority’s Handbook, sets out the
Authority’s statement of policy on the imposition of a financial penalty or public
censure. In particular, DEPP 6.5B sets out the five steps for penalties imposed on
individuals in a non-market abuse case in respect of conduct taking place on or
after 6 March 2010.
ANNEX B: REPRESENTATIONS
1. A summary of the key representations made by Mr Weller and by the third party,
David Rowland, and the Authority’s conclusions in respect of them (in bold type),
is set out below.
Mr Weller’s Representations
2. The basis of the allegations is that Mr Weller was aware1, or must have been
aware, of a material risk2 that the Presentation would be used to market the Firm.
No such possibility crossed Mr Weller’s mind. To establish liability, there needs to
be a finding that it was more likely than not that Mr Weller was subjectively aware
that there was a material risk that the Presentation was intended as a marketing
document or to benefit the Firm in some way. Mr Weller noted the inherent
probabilities of the situation in the case and referred to the following judicial
comment in Re H “the more serious the allegation the less likely it is that the event
occurred and, hence, the stronger should be the evidence before the court
concludes that the allegation is established on the balance of probability”3.
3. It is inherently unlikely that a person with no history of reckless disregard of risks
and nothing to gain by making proposals for market manipulation would assist in
what he thought might be the promotion of the Firm via a document setting out a
market manipulation strategy. This is particularly so when the “advice” is
acknowledged to be unrealistic. Mr Weller knows that manipulative trading is
improper. Mr Weller has never had a client complaint or any disciplinary or
regulatory action against him over the course of a long career. In addition, Mr
Weller has a history of promoting compliance issues, including when that made him
unpopular with his employer. It has not been alleged that Mr Weller stood to make
any personal gain from these matters.
4. Mr Weller is thus a person with a history of doing the right thing in compliance
terms, even when it was not in his personal interest to do so and his actions
attracted criticism.
1 Not should have been aware i.e. “objective” recklessness.
2 A person acts 'recklessly' with respect to: (i) a circumstance when he is aware of a risk that it exists or will
exist; (ii) a result when he is aware of a risk that it will occur and it is, in the circumstances known to him,
unreasonable to take the risk." R v G [2004] 1 AC 1034
3 Lord Nicholls of Birkenhead in Re H (Minors) [1996] AC 563, at 586-7.
5. The Authority considers that, after a request from Mr Rowland, Mr Weller
drafted an obviously improper manipulative trading strategy which was
aimed at undermining the Qatari currency. This was with a view to it being
discussed by senior people within the Firm (who he knew were well
connected in the UAE and would generally be seeking to advance the
interests of the Firm). He did so without any legitimate reason and
without: (a) making any enquiries or seeking any assurances as to exactly
who would discuss the strategy and why; (b) making clear he thought the
strategy contained in the SFNH Document was unrealistic and not to be
taken seriously (failing to take into account that the strategy in the SFNH
document could have been subsequently refined, after discussion, into
something more realistic); and/or (c) expressing any stipulation that his
ideas were for ‘internal’ discussion only.
6. The Authority has concluded that Mr Weller knew there was a material risk
that the Presentation would be disseminated for purposes which included
marketing the Firm’s services to investors or potential investors. The
Authority has further concluded that the Presentation was disseminated
to an Abu Dhabi sovereign wealth fund. In the absence of Mr Weller taking
reasonable steps to ensure his ideas for manipulative trading to
manipulate the Qatari currency would go no further (including that they
would not be discussed outside the Firm), the Authority considers that, in
the circumstances known to him, it was unreasonable for Mr Weller to take
that risk.
7. The Authority considers that such behaviour by a senior approved person
amounted to recklessness.
Mr Weller’s appreciation of the “Risk”
8. The genesis of Mr Weller’s SFNH document was around 13 September 2017 when
Mr Rowland asked him to join him in a meeting with Mr Bolelyy, with another
employee of the Firm and with an individual not employed by the Firm. The nature
of the conversation at that meeting did not suggest to Mr Weller that Mr Rowland
thought that the Firm, or the Rowland Family, was going to be, or attempting to
become, involved in any attack on the Qatari economy. Mr Rowland was not talking
seriously, and no-one took the discussion seriously. There is no evidence that Mr
Rowland appeared to be taking matters more seriously than anyone else. It was
not “a real thing”. Mr Weller made clear his view that the very idea of such an
attack was ludicrous and impossible. Even if Mr Rowland did actually intend the
slides to be “a way of signalling to potential clients that the Firm was willing to
countenance improper market conduct in order to advance their interests”, it did
not occur to Mr Weller that this was a possibility. Nor did it occur to Mr Weller,
when he was later asked to write down his ideas, that this might be in connection
with any form of marketing exercise.
9. Mr Rowland’s reference to “potentially being able to charge a small fee on the assets
put into a vehicle” was no more realistic than any other part of the conversation
during the meeting on 13 September 2017. Any talk of a fee on the assets was not
serious. Accordingly, Mr Weller did not conclude from the reference to the small fee
that Mr Rowland was contemplating using the ideas discussed to market the Firm.
The Firm was a small private bank, customers being individuals and family trusts.
It was not an investment bank and was not providing services to states or state
agencies. The Firm could not have assisted, even if the plan had been remotely
realistic.
10. Following the meeting on 13 September 2017, Mr Bolelyy sent an email to Mr Weller
and others4 stating, inter alia, that he (Mr Bolelyy) would “like us to assemble one
or two credible, high-level ideas” and he was to prepare “a presentation that will
be shared and discussed at a high level”. Mr Weller understood that the “high level”
referred to members of the Rowland Family and perhaps one other person (who
had worked closely with the family for a very long time). He thought it would go no
further. This is what led to Mr Weller putting together his SFNH Document. Mr
Weller did not understand this related to any plan under serious consideration and
was not aware that this had any connection with any trip that Mr Rowland and Mr
Bolelyy might make to the UAE. Mr Weller took the email as a request to type up a
discussion he viewed as ludicrous and completely unrelated from reality.
11. The document Mr Weller subsequently prepared, and its title “Setting Fire to the
neighbours house Fund” [sic] was informal and not proof-read. He spent a short
time creating a short, jokey document. Mr Weller did not consider that the SFNH
Document contained credible ideas (as its title reveals). It would have been
similarly fool-hardy for Qatar’s neighbours to attempt to attack the country’s
economy, even if it had been plausible that they might try. Not only would they
risk losing all of the $23bn of the Qatari bonds they held but, as Mr Weller’s
document recognises, there would be risk of serious jeopardy to their own
currencies. The idea that anyone would establish a “Fund” for this was nonsensical.
4 See page 5 for the full text of the email
Accordingly, the SFNH document is inconsistent with Mr Weller having understood
that he was being asked to send something credible and coherent, which could be
used in a document to be sent to prospective clients. The SFNH Document is
certainly not credible, and it is barely coherent.
12. If Mr Weller thought there was a risk of what was discussed with Mr Rowland and
the others being implemented or used for marketing, he would not have been
prepared to be involved. It is also not credible that Mr Weller would have created a
document like the SFNH Document, if he thought that it was likely to be used as
the basis for a marketing document. Its format and style are not appropriate for a
client presentation or useful for being turned into such a document. Proposing such
conduct would not be good marketing or a way of making a good impression on
anyone. This is directly relevant to Mr Weller’s perception of the risk that the
Presentation would be used for marketing illegality.
13. Mr Weller did not think the Presentation would be sent outside the Rowland Family
circle, nor did he see any connection between it and with advancing the Rowland
Family’s interests. Accordingly, he was not aware of the risk that the Presentation
would be disseminated for purposes that included marketing the Firm’s services to
potential investors. There was therefore no need for Mr Weller (or indeed anyone
else) to report anything to Compliance.
14. Mr Weller was not “enthusiastic” about the task. The style, format and content of
the SFNH Document is only consistent with Mr Weller having spent the little time
on it he says he did. It is not the work of an enthusiastic person who views himself
as contributing to a plan that will be implemented in the real world. Whether or not
Mr Weller found the discussion interesting or not, does not indicate that Mr Weller
thought the slides Mr Bolelyy prepared were intended as any form of marketing.
15. Mr Weller’s reaction to the Indian Article on 12 October 2017 does not indicate a
lack of surprise that his ideas had “got out of the building”. He promptly forwarded
it to Mr Rowland, as he thought Mr Rowland should be aware of the article. Mr
Rowland’s response to his email (“Made me laugh”) indicated that Mr Rowland was
unconcerned. Mr Weller would have expected Mr Rowland to react very differently,
if there had been anything in the report to be concerned about. Mr Weller had not
previously heard of the Indian media organisation, the Business Standard, and he
concluded that there was no truth in the story. There was nothing in the Indian
Article which caused Mr Weller to think that either his SFNH Document or the
Presentation had been sent to anyone outside the Rowland Family circle.
16. However, Mr Weller was surprised when he saw the article in The Intercept
published on 9 November 2017. His main thought was “What the hell is it doing
where it is?”. Mr Weller was amazed on looking at the Intercept Article at the idea
that the Presentation itself had apparently been received by the UAE Ambassador.
17. The Authority has concluded that Mr Weller was aware of the risk that the
Presentation might be discussed with parties external to the Firm, and that
it might be used to market the Firm’s services to potential investors.
18. Mr Weller knew the Rowland Family had close links to the Crown Prince of
Abu Dhabi and was aware of the tension between Qatar and its
neighbours; and from on or around 31 August 2017, Mr Weller was aware
that another senior member of the Rowland Family was interested in how
profit might be made from the political tensions impacting Qatar. At the
13 September 2017 meeting, Mr Rowland was interested in ideas to help
certain nation states conduct trading that might put pressure on Qatar and
the potential for “being able to charge a small fee on the assets put in a
vehicle”. Accordingly, Mr Weller understood that the ideas discussed at the
13 September 2017 meeting might be shared more widely amongst the
Rowland Family.
19. Given Mr Rowland expressly told Mr Weller he was interested in charging
a fee (which could only be obtained from potential investors), Mr Weller’s
own view of Mr Rowland as an “excitable, overly optimistic and unrealistic
character” and Mr Weller’s previous discussion with the other senior
member of the Rowland Family, the Authority considers that Mr Weller
appreciated there was a risk that Mr Rowland was interested in discussing
the forthcoming ideas with potential investors.
20. Following the meeting on 13 September 2017, Mr Bolelyy sent an email to
Mr Weller and the others attending the meeting, copying Mr Rowland, on
13 September 2017 stating the following (emphasis added):
I would really like us to assemble one or two credible, high-level
ideas re: a possible transaction structure.
The “winning idea” will then go into a presentation that will be
shared and discussed at a high level, so I am aiming to have the first
draft this Friday.
I will take care of how this content will be presented but, for now, I
would really like for all of us to sit down and jot something coherent
down.
Please have a further think and let’s reconvene tomorrow.
As always, many thanks for your contribution.
21. The risk (at least) that Mr Rowland was not treating the matters discussed,
in the meeting of 13 September 2017, as hypothetical and ridiculous was
highlighted by Mr Bolelyy’s email to Mr Weller and the others attending
the meeting sent shortly after the meeting. Mr Bolelyy explicitly requested
“one or two credible, high-level ideas” to go into “a presentation” and he
would need to “jot something coherent down”. However “laughy, jokey”
the discussions may have been at the 13 September 2017 meeting, there
was an obvious risk that Mr Rowland and Mr Bolelyy were not treating the
matter in the same “jokey” spirit.
22. The Authority would expect a senior manager in Mr Weller’s position,
receiving this relatively short and clear email, to have raised a number of
matters before (if at all) he formulated and circulated any ideas, as
requested. For example, for whom exactly was the presentation designed,
why was it was being prepared and how would it be made clear to those
discussing the presentation that it was not to be taken seriously? Mr
Weller asked no such questions, nor did he seek to decline to provide input.
The Authority considers that Mr Weller appeared enthusiastic about the
project and that he cannot have believed that his SFNH Document was
completely “unrelated from reality”.
23. The Authority also notes Mr Bolelyy’s comment in the above email, where
he states that: “[he] will take care of how this content is prepared”. This
suggests that the informal language and tone (as in the SNFH Document)
is not, as Mr Weller asserts, inconsistent with him understanding he had
been asked to send something credible and coherent to Mr Bolelyy.
24. It is in this context that Mr Weller drafted the SNFH Document which
contained a highly improper trading strategy, setting out a proposed
course of market manipulation, including the use of wash trades, currency
manipulation and the misuse of PR agencies, with the express aim of
negatively impacting the economy of Qatar.
25. The strategy Mr Weller set out in his SFNH Document focussed on the
participation of Saudi Arabia and the UAE (which, as he knew, were Qatar’s
most prominent critics at the time) and was sensitive to the potential
impact on the UAE’s own currency. The Authority infers from this that Mr
Weller was aware of the risk that Mr Rowland was interested in presenting
the ideas to potential investors, including in the UAE.
26. Mr Weller forwarded the SFNH Document by email to Mr Bolelyy on 14
September 2017 without any covering comment. Mr Weller expressed no
concern about Mr Bolelyy seeking credible/coherent ideas for a
presentation. He did not seek any assurances as to who those ideas might
be presented to or what might be done with them. Instead, according to
Mr Weller, he simply relied upon the more junior Mr Bolelyy appreciating
that the “SFNH was consciously facetious” and “not intended to be taken
seriously”. The Authority considers that it was insufficient and
unreasonable for Mr Weller to assume that Mr Bolelyy, or indeed anyone,
would not take his ideas in the SFNH Document seriously.
27. The Authority considers that creating and providing the SFNH Document,
as Mr Weller did, created an obvious risk that those to whom its ideas were
presented might treat them as credible and coherent (or might use them
to develop a similar strategy aimed at the same ends). In circumstances
where Mr Weller had not sought, or been provided with, any explanation
as to what legitimate purpose the SFNH Document might serve, the
Authority has concluded that Mr Weller was aware of the risk that Mr
Rowland might seek to use the ideas in the SFNH Document in discussions
with potential investors designed to benefit the Rowland Family interests,
including those of the Firm.
28. The Authority has concluded that Mr Bolelyy provided a copy of the
Presentation to a representative of an Abu Dhabi sovereign wealth fund
(albeit not the senior representative who was in Brazil at the time) and
that Mr Rowland knew that he had done so.
29. The Indian Article linked David Rowland and the Firm to an “economic
warfare strategy” serving the UAE’s interests involving manipulative
trading and a negative public relations campaign, in order to break Qatar’s
currency peg or to force Qatar to spend considerable dollar reserves on
maintaining it. The Authority considers that Mr Weller must have noticed
the similarities between his SFNH Document and plan described in the
Indian Article, which alleged the strategy was actually being deployed. Mr
Weller made no enquiries of and expressed no concerns to Mr Rowland or
anyone else as to how his ideas had ended up in the Indian Article, nor did
he alert the Firm’s Compliance Department. From the information
contained in the Indian Article, it must have been obvious to Mr Weller
that the same ideas he had formulated in the SFNH Document were now
being reported in the press. The ideas had, therefore, clearly gone further
than the Rowland Family, to which Mr Weller has indicated he thought his
ideas had been confined.
30. The Authority considers that Mr Weller’s decision not to express any
concerns to Mr Rowland or anyone else, and not to inform Compliance, as
to how his ideas had “got out of the building” and reached an external
audience supports the conclusion that he was always aware of the
potential for the Presentation to be disseminated for purposes that
included marketing the Firm.
31. The Authority considers that Mr Weller could not have been amazed by the
substance of the Intercept Article, namely, linking the Firm to the
“Stunning Plan to Wage Financial War on Qatar – and steal the World Cup”
because these allegations had already been made in the Indian Article
from which it was obvious that the ideas Mr Weller had formulated in the
SFNH Document had indeed “got out of the building”.
32. COCON 1.1.6R provides that COCON applies to the conduct of an approved person,
P, in relation to the performance by P of functions relating to the carrying on of
activities (whether or not regulated activities) by the firm… on whose application
approval was given to P.
33. For the purposes of a financial penalty, what is relevant is Mr Weller’s contribution
to the discussion initiated by Mr Rowland, his preparation of the SFNH document
and his correcting a typo in Mr Bolelyy’s slides. Mr Weller did not think that he was
then contributing to the provision of advice by the Firm or the marketing of its
services. Mr Weller was not performing a function relating to the provision of advice
by the Firm or to the Firm’s own marketing. To satisfy COCON 1.1.6R, there must
have been an awareness by [the approved person] that the firm is preparing advice
or at least contemplating advising. The same applies in relation to marketing: even
if Mr Weller in fact appreciated that marketing material was being created, he was
not performing a function related to marketing by the Firm, if he did not think it
was “a bank project”. Accordingly, COCON 1.1.6R is not satisfied.
34. There is no evidence that the Presentation constituted advice by, or marketing of,
the Firm. It is perfectly possible for slides to have been prepared without Mr Bolelyy
or Mr Rowland turning their mind to whether they contained advice, or whether
that advice was regulated, and therefore without any thought as to whether, if the
slides were to be used, that had to be on behalf of the Firm. The Presentation did
not mention the entity whose services are being promoted. The activities described
in the Presentation did not involve services which anyone suggests the Firm might
have performed, and the suggested intended audience were not potential
customers of the Firm.
35. The non-Bank Business nature of the Presentation is clear from, inter alia, the
•
It was not the case that all the key employees involved in the creation and
dissemination of the Presentation received salary exclusively from the Firm
during the Relevant Period. An individual not employed by the Firm actively
contributed to the Presentation and Mr Rowland’s employment status and
salary were not determinative as to whether he was acting in his Chief
Executive capacity; he was concerning himself with Rowland Family
business particularly, spending significant time working on the Financial
Institution.
•
The Firm’s standard template for presentations was not used and Mr Bolelyy
saved the various drafts onto his personal folder. The Firm’s offices and
resources were also used for the Financial Institution project.
•
Whilst the Presentation was found in a tasks folder of the UAE Ambassador
named “Rowland Banque Havilland”, the title of the folder is neutral as to
whether it contained material relating to the Firm alone or to the Rowlands
and the Firm.
36. It was the Rowland Family that had a far more direct financial interest in relations
with the UAE, namely with the establishment of the Financial Institution, than did
the Firm. Unless the slides were intended to be used on behalf of the Firm, as
opposed to the Rowland Family, they were not activity of the Firm. Mr Weller was
not performing any function in relation to the carrying on of activities by the Firm,
and COCON 2.1R is accordingly not engaged.
37. The Presentation was created in the Firm’s London Office premises, using
the Firm’s IT systems, and was disseminated from Mr Rowland’s Firm
email account. Mr Bolelyy’s email to self, dated 12 September 2017, was
sent by him to and from his email address at the Firm. In the Authority’s
view, the clearly inappropriate nature of the Presentation makes it likely
that Mr Bolelyy would not have filed it in the usual place within the Firm’s
IT systems, where it would have been accessible to other employees of
the Firm not involved in assisting with the preparation of the Presentation.
38. The salaries of Mr Weller, Mr Rowland and Mr Bolelyy were exclusively paid
by the Firm. Mr Rowland was an SMF 21 (EEA Branch Manager) of the Firm
during the Relevant Period and thereafter, up to 15 December 2017. Mr
Rowland remained a Board Member of the Firm and continued to be
influential in the London Branch. Mr Rowland was described, by another
senior member of staff as still being the “Boss” even after he formally
stood down as the Chief Executive. Although he may not have spent all his
time working on the Firm’s matters during the Relevant Period (for
example when he was working on the Financial Institution project), this
did not preclude him from spending some of his time working on matters
relating to the Firm. Mr Bolelyy’s salary was exclusively paid by the Firm;
he did not receive an income from Mr Rowland, or the Rowland Family,
directly.
39. There was one individual not employed by the Firm involved in the
Presentation’s production. However, his input appears to have been
limited to advising on football matters (i.e. not on financial services) and
the preparation of the slide regarding the “FIFA Option”. All other
personnel involved in the Presentation’s production, and in relation to the
financial services content (as opposed to the football content) were
employed by, and received a salary exclusively from, the Firm during the
Relevant Period. Receiving assistance from a person not employed by the
Firm, for a limited part of the Presentation, does not in the Authority’s view
change the nature of the document as a whole.
40. The Authority notes that the Presentation was reported to have been found
in the UAE Ambassador’s Outlook Tasks under the name of “Rowland
Banque Havilland”, appearing to indicate the origin of, or at least the
Firm’s connection with, the Presentation. The Authority has come to no
conclusions as to why it was reported that the Presentation was found in
the UAE Ambassador’s Outlook Tasks.
41. The Authority has concluded that the advice in the Presentation was
regulated activity.
42. As the Authority has determined that the regulated activity in the
Presentation was Bank Business, the Authority may impose a penalty on
Mr Weller for breach of Individual Conduct Rule 1 because his conduct
related to the performance by him of functions relating to the carrying on
of that regulated activity by the Firm (COCON 1.1.6R).
Was the Presentation given?
43. There is no basis for a finding (or therefore for proceeding on the basis) that any
presentation was in fact sent to representatives of the UAE.
44. The UAE Ambassador has expressly said that he did not receive the slides, so it
cannot be concluded that they were sent to him. The telephone call between Mr
Rowland and David Rowland, dated 19 October 2017, does not indicate that any
set of slides had been presented to or discussed with any representative of the
UAE. Instead, Mr Rowland and David Rowland were both convinced that the Indian
Article had resulted from David Rowland’s email having been hacked.
45. If the slides were not in fact given to any UAE representative, the theory that they
were marketing of any sort becomes even more improbable, and it is impossible to
maintain a case that Mr Weller’s conduct related to the performance of a function
by the Firm.
46. As requested by Mr Rowland, Mr Bolelyy printed off two copies of the
Presentation to take on their trip to Abu Dhabi, so that it could be
discussed with a representative of an Abu Dhabi sovereign wealth fund.
Mr Bolelyy signed a statement, dated 15 November 2017, saying that
during the visit he had handed one single copy of the Presentation to a
(named) senior employee of an Abu Dhabi sovereign wealth fund. On 13
November 2017 Mr Rowland confirmed that Mr Bolelyy had said to him on
21 September 2017, that he had provided the Presentation to the senior
employee. On 25 November 2017, Mr Rowland signed a statement saying
that he was made aware that Mr Bolelyy may have given the Presentation
to a junior employee at the same Abu Dhabi sovereign wealth fund.
47. Mr Bolelyy subsequently withdrew his statement that he had passed the
copy of the Presentation to the (named) senior employee. He then added
he may have given the Presentation to a junior employee. Mr Rowland
subsequently withdrew his statement.
48. Mr Rowland purported to explain why he did so. He said that he had had
no knowledge of Mr Bolelyy sharing the Presentation and he had assumed
that the Firm’s internal investigation had already determined that he had.
However, when he later learnt that the senior employee of the Abu Dhabi
sovereign wealth fund had been in Brazil at the time of the trip to Abu
Dhabi, he considered he had been mistaken.
49. The Authority refers to the telephone call between Mr Rowland and David
Rowland on 12 October 2017. In this call, David Rowland asked Mr
Rowland how he thought the “thing in the Indian paper got there”. Mr
Rowland replied “probably, I assume – probably a leak from their office I
would imagine”. Mr Rowland then says he is aware that the content of the
Presentation had been discussed with “their” office. The Authority infers
that “their office” refers to the office of the Abu Dhabi sovereign wealth
fund, which had been provided with a copy of the Presentation during the
visit. Mr Rowland appeared to see publication of the Firm’s involvement as
“a badge of honour” with respect to the Abu Dhabi sovereign wealth fund.
50. Mr Rowland has stated that the Presentation (albeit in a different form)
was requested by the senior representative of the Abu Dhabi sovereign
wealth fund. Two copies of the Presentation were taken on the visit to Abu
Dhabi, so that it could be discussed with them. The Authority considers
that Mr Bolelyy did in fact provide a copy of the Presentation to a
representative of the Abu Dhabi sovereign wealth fund (albeit not the
senior representative who was in Brazil at the time) and that Mr Rowland
knew that he had done so.
Disciplinary sanction
51. The allegation against Mr Weller is that he knew that there was a material risk that
Mr Bolelyy’s slides would be used to market the Firm’s services. Mr Weller certainly
did not believe (or know) that there was any risk that anyone would encourage
financial crime (for profit or otherwise). As Mr Weller understood it, no-one believed
that the steps set out in the slides would be or could be carried out; this reduces
the seriousness of any breach. The allegation against him is that he contributed to
the preparation of a document which set out an unrealistic strategy which no-one
intended to implement, being reckless as to the risk that the document might be
used to market the Firm’s services. That is materially less serious than either
participating in or encouraging criminal conduct.
52. In addition, it is unfair to characterise the conduct as assisting a more junior
member of staff in committing the breach. Mr Bolelyy did not work for Mr Weller
and their relative seniority was not relevant. Mr Bolelyy was preparing the
Presentation because Mr Rowland (the boss of Mr Bolelyy and Mr Weller) had asked
him to do so. Mr Weller prepared the SFNH Document because he understood that
Mr Bolelyy was passing on a request from Mr Rowland, not to assist Mr Bolelyy in
any activity of his own.
53. Mr Weller did not intend to (and did not) benefit financially directly or indirectly and
did not seek to conceal his actions – on the contrary, he has cooperated with the
Authority throughout the investigation and has at all times acted very promptly. If
Mr Weller committed a breach at all, he did so inadvertently because he was not
aware that the discussion on 13 September 2017 was other than wholly
hypothetical.
54. In those circumstances, the breach does not justify level 4 seriousness.
55. The financial and other consequences for Mr Weller of the alleged breach are
relevant to the principles of the FCA’s penalty setting regime, as set out in DEPP
6.5.2G, namely disgorgement, discipline and deterrence. DEPP 6.5.3(4) recognises
that the factors and circumstances in DEPP 6.5A to DEPP 6.5D are not exhaustive
and, in a particular case, that there may be other factors or circumstances which
are relevant. In Mr Weller’s case there are other relevant factors and
circumstances, including his significant financial losses after he was dismissed from
his employment. It would be perverse for the Authority to ignore entirely losses
caused by the breach. Mr Weller accepts that the tone and content of the document
were not appropriate and regrets preparing the document. A proportionate
disciplinary measure must take into account the impact that the breach has already
had on the individual and Mr Weller has already been significantly impacted. This
is also relevant for deterrence: Mr Weller will not repeat his mistake. It was an
isolated incident, wholly out of character, and at odds with his usual approach to
compliance issues generally.
56. Mr Weller, as a senior manager, played a key role in the creation of the
Presentation, which contained obviously improper advice for investors or
potential investors by recommending manipulative trading strategies. He
sent it to a more junior colleague for wider circulation without having been
given any proper reason for doing so. He knew that there was a material
risk it would be disseminated for purposes that included marketing the
Firm’s services to potential investors. His behaviour was reckless.
57. The Authority considers that it is appropriate to characterise the conduct
as assisting a more junior member of staff in committing the breach –
without Mr Weller’s SFNH document, Mr Bolelyy would have been unable
to take the matter further and draft the Presentation.
58. The Authority has taken into account all relevant factors in considering the
level of seriousness of Mr Weller’s conduct. His level of personal culpability
justifies the Level 4 finding.
59. The Authority considers that the level and nature of Mr Weller’s
cooperation throughout the investigations is a mitigating factor and it is
appropriate to apply a mitigation discount. The Step 2 figure is therefore
subject to a 10% discount at Step 3 (DEPP 6.5B.3G(2)(b)).
60. The Authority has noted Mr Weller’s comments on the impact of his
dismissal from his employment and of the Authority’s investigation. The
Authority does not consider that these should be treated as mitigating
factors in this case (DEPP 6.5B.3G).
Prohibition order
61. A prohibition order is inappropriate in this case.
62. In order to make a prohibition order, the Authority must conclude that Mr Weller is
not a fit and proper person to perform functions in relation to a regulated activity.
A prohibition order does not follow automatically from a finding that a person, even
a senior manager, has breached the requirement to act with integrity5. An isolated
instance of acting inappropriately does not necessarily imply that a person lacks
integrity generally, or that he or she is likely to behave without integrity in the
future.
63. The alleged breach is that Mr Weller was reckless as to the risk that the Firm might
market its services in a particular way, not that he was reckless as to a risk that
financial crime might be committed. Mr Weller did not himself engage in any
relevant marketing, and there is no evidence that anyone did. Mr Weller has learned
his lesson, and there is no risk of him treating suggestions of improper conduct
(however outlandish) light-heartedly in the future. Mr Weller no longer works in
financial services and the isolated incident was in 2017.
64. Prohibiting Mr Weller would have a disproportionate and unwarranted effect on him
personally. It is not necessary for the protection of consumers or markets.
65. The Authority has taken into account all relevant factors to determine
whether it is satisfied that it is proportionate, in all the circumstances, to
make a prohibition order pursuant to section 56 of the Act. These factors
include that this was a single instance of acting without integrity, the
passage of time and Mr Weller no longer being involved in financial
services.
5 FCA v Tinney [2019] UKUT 227 (TCC); and FCA v Hannam [2014] UKUT 233 (TCC)
66. Having taken all the relevant factors into account, the Authority considers
that Mr Weller’s lack of integrity was sufficiently serious that he is not a
fit and proper person to perform functions in relation to a regulated
activity, and has decided that it is both proportionate and reasonable to
impose a prohibition order on him.
David Rowland’s Representations
67. The 30 August 2017 meeting was organised by Individual A, because the senior
representative of an Abu Dhabi sovereign wealth fund was due to be in London on
other business. It was an informal, unstructured meeting, with no agenda. David
Rowland attended the meeting to advance his interest in the Financial Institution,
which was a proposed partnership between the Abu Dhabi sovereign wealth fund
and David Rowland. This project was discussed in addition to personal greetings
and probably matters related to UK politics. The meeting lasted at most 20 minutes,
the Firm was not mentioned, and no mention was made of anything which could
have related to what became the contents of the Presentation. As the meeting
concluded, David Rowland went downstairs to use the cloakroom, leaving Mr
Rowland talking with the senior representative. Mr Rowland subsequently briefly
mentioned to David Rowland something about the Abu Dhabi sovereign wealth fund
“hedging their exposure”.
68. David Rowland’s attendance at the August Meeting had no significance and was not
relevant to the subsequent creation of the Presentation, nor did he have any
“behind the scenes” role in its creation. His involvement with the UAE is wholly
unrelated to the Firm. David Rowland does not think he has ever discussed the
Firm with the senior representative of the Abu Dhabi sovereign wealth fund or with
the Ruler of the UAE, whom David Rowland regards as a very close personal friend.
69. David Rowland has never attended any Board Meetings of the Firm or any
management meetings, nor has he been involved, or interfered, in any manner in
the management of the Firm. David Rowland’s attendance at the August Meeting
does not indicate that the Presentation was Bank Business, or that Bank Business
was discussed. David Rowland may have been Honorary President of the Firm, but
it meant nothing and gave him no authority in the Firm, it was a fiction. The title
was merely there to demonstrate his support for, and underwriting of, the Firm and
to give confidence to depositors.
70. David Rowland went to Abu Dhabi with Mr Rowland in late September 2017. He did
not discuss, read or look at the Presentation with Mr Rowland or anyone else during
this visit. It was inconceivable that Mr Rowland would have not mentioned the
Presentation to David Rowland, had he intended to hand over the Presentation to
promote the interests of the Rowland Family. Bank Business had no relevance to
the trip and the Firm has, and had, no relationship with the UAE.
71. The Presentation was not “disseminated”. The term dissemination is only used to
describe an act of distributing widely; this did not happen, as it was only sent to
David Rowland and Individual A, and there was no intention by either David
Rowland or Individual A to disseminate the Presentation. David Rowland was not
aware at the time he received the Presentation that he had received it by email
and did not open, read, print or forward it or give a copy to anyone else. The
Presentation was deleted from David Rowland’s computer by the automatic seven-
day deletion policy on his email system. The UAE Ambassador confirmed to David
Rowland, at the Abu Dhabi Grand Prix towards the end of November 2017, that he
had never received a copy. Accordingly, there was no meaningful “dissemination”,
and as this term is pejorative, it should not be used.
72. David Rowland was not aware of the Presentation, or its contents, until The
Intercept made contact. The telephone calls between David Rowland and Mr
Rowland on 12, 13 and 19 October 2017 do not indicate that David Rowland was
aware of the contents of the Presentation. Throughout these telephone calls David
Rowland and Mr Rowland were concerned about their communications being hacked
by agents of Qatar. The Presentation was not discussed; David Rowland’s concerns
related to a document regarding the Financial Institution and whether his phone
had been hacked. They therefore talk about what he and Mr Rowland should do
with their phones and their email addresses. The telephone calls were unguarded
conversations between father and son and do not show any attempt at a cover-up.
73. David Rowland has no idea what the references to “their office” refers to but
speculates that it could be Qatar or the office of Individual A who had also been
hacked by Qatar. The reference in the telephone calls to “badge of honour” is
nothing to do with the Presentation, nor to an economic warfare strategy. It
concerned the bad publicity resulting from being attacked by Qatar, due to David
Rowland’s friendship with and connection to the UAE. The Presentation could not
be used as a badge of honour; it was nonsense and a hugely embarrassing
document.
74. The Authority has not asserted that David Rowland was present during the
conversation between Mr Rowland and the senior representative of the
Abu Dhabi sovereign wealth fund, when the request for advice is said to
have occurred. Discussions at the August Meeting regarding the Financial
Institution did not preclude discussions on other matters which could be
taken forward as Bank Business. Such matters include the Presentation.
The Authority has not asserted that David Rowland had a “behind the
scenes” role in the creation of the Presentation.
75. Mr Rowland forwarded a copy of the Presentation to Individual A and David
Rowland using their email addresses outside the Firm. The Authority has
not asserted that David Rowland forwarded the Presentation. Having
taken into account all the relevant evidence, including that of Mr Bolelyy
and Mr Rowland, and the contents of the telephone calls on 12, 13 and 19
October 2017 between David Rowland and Mr Rowland, the Authority has
concluded that Mr Bolelyy did provide a copy of the Presentation to a
representative of the Abu Dhabi sovereign wealth fund during the trip to
Abu Dhabi. Accordingly, the Authority considers that it is appropriate to
state that the Presentation was “disseminated”.
76. The Authority refers to the fact that between April 2014 and June 2018
(which includes the Relevant Period) the Firm’s website referred to David
Rowland as its Honorary President and that, during the telephone call on
19 October 2017, David Rowland stated to Mr Rowland “don’t let’s put
anything on the Bank emails…and you can put that Vladimir [Bolelyy],
make him have one on, with Liwathon…and as soon as we can we take him
off the Bank’s payroll”. The Authority infers that, in practice, David
Rowland had a level of influence and management within the Firm.
77. In the telephone call between David Rowland and Mr Rowland on 12
October 2017, David Rowland asked Mr Rowland how he thought the
“thing in the Indian paper got there”. Mr Rowland replied “probably, I
assume – probably a leak from their office I would imagine”. Mr Rowland
then said he was aware that the content of the Presentation had been
discussed with “their” office. The Authority infers that “their office” refers
to the office of the Abu Dhabi sovereign wealth fund, which had been
provided with a copy of the Presentation during the visit. Mr Rowland also
stated to David Rowland “Never been talked to anyone else”. The
Authority infers that Mr Rowland was saying that the Presentation had not
been discussed with anyone other than the Abu Dhabi sovereign wealth
fund. Mr Rowland appeared to regard publication of the Firm’s involvement
as “a badge of honour when we go and see them next time”, and David
Rowland stated that “you can, we can capitalise on this” [with respect to
the Abu Dhabi sovereign wealth fund]. The Authority infers that at the time
of the telephone calls David Rowland is likely to have been aware that the
Presentation had been provided to the Abu Dhabi sovereign wealth fund.
To:
Mr David Edward Weller
Individual
Reference
Number:
DXW01275
1.
ACTION
1.1.
For the reasons given in this Notice, the Authority has decided to:
1.1.1. impose on Mr David Edward Weller a financial penalty of £54,000 pursuant
to section 66 of the Act; and
1.1.2. make an order, pursuant to section 56 of the Act, prohibiting Mr Weller from
performing any function in relation to any regulated activity carried on by
any authorised or exempt person, or exempt professional firm.
2.
SUMMARY OF REASONS
2.1.
During the Relevant Period, Mr Weller played a key role in the creation of a
document, namely the Presentation, which contained obviously improper advice for
potential investors by recommending manipulating trading strategies, including
This Decision Notice has been referred to the Upper
Tribunal by Mr David Rowland, exercising third party
rights, which will determine whether to dismiss the
reference or remit it to the FCA with a direction to
reconsider and reach a decision in accordance with the
findings of the Upper Tribunal. Therefore, the findings
outlined in this Decision Notice are provisional in that
they reflect the FCA’s belief as to what occurred and
how it considers the behaviour described should be
characterised. Mr Weller has not referred this Decision
Notice to the Upper Tribunal.
The Upper Tribunal’s decision will be made public on its
website.
recommending conduct which could be a criminal offence, had it taken place in the
UK. At the time, Mr Weller was a senior manager in the Firm.
2.2.
The Presentation set out the Strategy. The Strategy comprised a multi-faceted
approach that included conduct aimed at creating a false or misleading impression
as to the market in, or the price of, Qatari bonds, with the objective of harming the
economy of Qatar. Creating a false or misleading impression as to the market in,
or the price of, Qatari bonds would be an extremely serious matter and potentially
a criminal offence, if it were to take place in the UK (contrary to section 90 of the
Financial Services Act 2012). Section 1H of the Act provides that an offence
involving such misconduct amounts to “financial crime” for the purpose of the Act.
2.3.
The Strategy included regulated advice (pursuant to article 53 of the Regulated
Activities Order and section 22(1) of the Act) aimed at the UAE and/or other states
in the Middle East region because it advised those potential investors to transfer
their existing holdings of Qatari bonds into a “protected cell company” to “preserve
integrity” before manipulative trading intended to destabilise the Qatari economy
took place, which trading was to include the purchase of CDS and the sale and
purchase of Qatari bonds.
2.4.
Mr Weller assisted other employees of the Firm in the drafting of the Presentation,
knowing that there was a material risk it would be disseminated for purposes that
included marketing the Firm’s services to potential investors (namely
representatives of the UAE and/or other states in the Middle East region, who Mr
Weller knew others in the Firm believed might have reasons to want to put
economic pressure on Qatar).
2.5.
The Presentation signalled to potential clients that the Firm was willing to facilitate
manipulative trading. The Authority considers it particularly serious that Mr Weller,
as a person who held a position of significant influence within an authorised firm,
provided a more junior staff member with ideas as to how to draft the Presentation.
2.6.
By virtue of the misconduct described in this Notice, Mr Weller failed to act with
integrity in breach of Individual Conduct Rule 1 (COCON 2.1.1R) and demonstrated
that he is not a fit and proper person to perform any function in relation to any
regulated activities.
2.7.
The Authority has decided to (i) impose on Mr Weller a financial penalty of £54,000
pursuant to section 66 of the Act, and (ii) make an order prohibiting Mr Weller from
3
performing any function in relation to any regulated activities carried on by any
authorised or exempt person, or exempt professional firm pursuant to section 56
of the Act.
3.
DEFINITIONS
3.1.
The definitions below are used in this Notice:
“the Act” means the Financial Services and Markets Act 2000;
“the Authority” means the Financial Conduct Authority;
“CDS” means credit default swap;
“COCON” means Code of Conduct in the Authority’s Handbook;
“Currency Peg” means a policy in which a national government sets a specific fixed
exchange rate for its currency with a foreign currency or a basket of currencies;
“DEPP” means the Decision Procedure and Penalties Manual, part of the Authority’s
Handbook of Rules and Guidance;
“EG” means the Authority’s Enforcement Guide set out in the Authority’s Handbook;
“the Financial Institution” means a financial institution being established through a
partnership of an Abu Dhabi sovereign wealth fund and the Rowland Family before,
and during, the Relevant Period. It was not a project of the Firm;
“the Firm” means Banque Havilland SA;
“Head Office” means the head office of the Firm in Luxembourg;
“the Indian Article” means an article regarding the Presentation published by an
Indian media organisation called the Business Standard, entitled “Gulf Crisis may
affect Qatar’s security, India’s economic interests” on 12 October 2017;
“Individual A” means the individual engaged by the Firm to market its services in
the UAE and the wider Middle East region;
“the Intercept” means a media organisation called The Intercept.com;
“the Intercept Article” means an article regarding the Presentation published by the
Intercept on 9 November 2017;
“London Branch” means the branch of the Firm based in London;
“MLRO” means Money Laundering Reporting Officer;
“Mr Rowland” means Edmund Lloyd Rowland;
“PERG” means the Perimeter Guidance Manual in the Authority’s Handbook;
“the Presentation” means the document drafted by the Firm setting out a series of
steps which could be taken to harm the economy of Qatar, by using manipulative
trading practices aimed at creating a false or misleading impression as to the
market in or the price of Qatari bonds;
“the Regulated Activities Order” or “the RAO” means the Financial Services and
Markets Act 2000 (Regulated Activities) Order 2001;
“the Relevant Period” means the period from 13 September 2017 to 13 November
2017;
“the Rowland Family” means the family of David Rowland;
“the SFNH Document” means a document created by David Edward Weller on 14
September 2017 entitled “Setting Fire to the Neighbour’s House fund” setting
out details of a series of steps to devalue the Qatari Riyal by increasing and
encouraging selling pressure;
“the Strategy” means the series of steps as set out in the Presentation which could
be taken to harm the economy of Qatar by using manipulative trading practices
aimed at creating a false or misleading impression as to the market in or the price
of Qatari bonds;
“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber);
“UAE” means United Arab Emirates;
“Warning Notice” means the Warning Notice given to Mr Weller dated 14 October
2021; and
“Wash Trade” means a sale or purchase of an instrument where there is no change
in beneficial interest or market risk, or where the transfer of beneficial interest or
market risk is only between parties acting in concert or collusion, other than for
legitimate reasons.
4.
FACTS AND MATTERS
Mr Weller and the Firm
4.1.
The Firm was established in 2009 by the Rowland Family and described itself,
during the Relevant Period, on its website “as being managed with the financial
conservatism which is the family’s hallmark”. The Firm’s head office is in
Luxembourg. It has various branch offices, including one in London. The Firm was
also described on its website as “an integral part of the [Rowland] Family’s interests
on both a professional and personal level”.
4.2.
During the Relevant Period, Mr Weller was the Head of Asset Management at the
London Branch and was approved by the Authority to carry out the EEA branch
senior manager function (“SMF21”) at the Firm. Those holding SMF21 are
employees who have significant responsibility for one or more significant business
units of a branch of an incoming EEA firm in the UK. Mr Weller’s specific role was
as Head of Asset Management. He reported to Mr Rowland (see below) and to the
Firm’s Group Head of Asset Management.
4.3.
The key individuals involved in this matter were employees in the London Branch,
namely Mr Weller, Mr Rowland and Vladimir Bolelyy. During the Relevant Period:
4.3.1.
Mr Rowland was approved by the Authority as SMF21. He was Chief
Executive of the Firm’s London Branch for almost three years before
stepping down in April 2017, after which he retained his SMF21 status.
He was formally re-appointed as Chief Executive on 26 September 2017
(part way through the Relevant Period) and continued in this role until
his resignation on 13 December 2017. Throughout the Relevant Period
Mr Rowland was more senior than Mr Weller.
4.3.2.
Mr Bolelyy was employed by the Firm as a senior investment analyst and
was Mr Rowland’s assistant reporting directly to him.
4.4.
Throughout the Relevant Period, Mr Weller, Mr Rowland and Mr Bolelyy were
employed by, and received salary from, the Firm only.
Marketing in the UAE
4.5.
On 18 April 2017, the Firm engaged the services of Individual A to provide
“consulting and professional assistance in developing Banque Havilland in the
United Arab Emirates”. His professional assistance was defined as to expand “the
undertaking of Banque Havilland in the UAE and broader Middle East, with specific
assistance in terms of strategic marketing, local networking or anything else which
will be agreed by the Parties as useful to serve the present purpose”. Individual A
was paid a monthly fee of USD 10,000 for these services. In addition to this
consultancy role, Individual A was also a special adviser to the Crown Prince of Abu
Dhabi (Abu Dhabi is the capital of the UAE).
The Qatar diplomatic crisis
4.6.
In June 2017, as was widely reported in the press, a Saudi-led coalition of Gulf
states (including the UAE) severed diplomatic relations with Qatar, citing Qatar’s
alleged support for terrorism as the main reason. The Qatari Riyal had a currency
peg with the US Dollar throughout the Relevant Period.
30 August 2017 meeting
4.7.
On 30 August 2017, at a meeting organised by Individual A, Mr Rowland and David
Rowland (Mr Rowland’s father and the ultimate controller of the Firm) met with a
senior representative of a UAE sovereign wealth fund. Prior to that meeting, on 27
August 2017, Mr Rowland had referred to the forthcoming meeting and stated to a
colleague: “they have another potential opportunity they want me to look at also”.
Mr Rowland told the Authority during an interview that at this meeting it was made
clear to him, in the absence of David Rowland, that the UAE sovereign wealth fund’s
representatives were concerned about the substantial exposure that Emirati banks
had in the interbank market to Qatar and particularly to the local banking sector.
This was due to the situation between Qatar and the UAE and the representatives’
fears that the stand-off would be significantly extended as no rapprochement
seemed to be on the horizon. This was a reference to the political tensions in that
region which had worsened since June 2017.
The Presentation
7
4.8.
At some point after the 30 August 2017 meeting and no later than 12 September
2017, Mr Rowland tasked Mr Bolelyy with preparing a written presentation as to
how economic pressure might be put on Qatar. Subsequently, on 12 September
2017 Mr Bolelyy sent himself an email recording the following matters in a number
of bullet points, all of which he then included in the first draft: “Bond exposure;
What natters [sic] is western view; Foreign reserves; Currency peg break; Cash to
pay for insurance; “Sanctions don’t work unless everyone is doing it”; Currency peg
pressure is effective when thought by everyone; Avoid jargon; Segregated vehicle”.
4.9.
The first draft of the document which became the Presentation, prepared by Mr
Bolelyy on 12 September 2017 in the form of slides, was named “Qatar
Opportunity” and proposed a series of steps with the purpose of devaluing the
Qatari Riyal and breaking its peg to the US dollar.
13 September 2017 meeting
4.10. On the following day, 13 September 2017, a meeting was convened at short notice
of various individuals in the London Branch; these individuals were Mr Weller, Mr
Rowland, Mr Bolelyy, another employee of the Firm and an individual not employed
by the Firm.
4.11. At the meeting, which appears to have lasted for about a quarter of an hour and
was subsequently described by Mr Weller as a brain-storming session, Mr Rowland
asked for ideas on how negatively to impact the Qatari economy by undermining
the value of the country’s currency. Mr Rowland explained that Saudi Arabia, Abu
Dhabi [sic] and Egypt were keen as nation states to persuade Qatar to stop some
of its funding activities. He further explained that the 3 countries had a combined
$23 billion of Qatari assets that they were prepared to use to pressure the Qatari
Riyal. Mr Rowland went on to state that the potential economic interest for the
Rowland family would come from being able to charge a small fee on the
assets which would be transferred to a vehicle arranged by the Rowland family.
4.12. The Authority infers that Mr Weller understood there was a material risk that the
Presentation would be presented to representatives of the UAE and/or other states
in the Middle East region which Mr Rowland considered might have reasons to want
to put economic pressure on Qatar, and Mr Weller understood that Mr Rowland was
motivated by the potential to earn fees for Rowland Family interests which included
the Firm. Regardless of whether the Strategy as set out in the Presentation was
practicable or likely to be accepted by such representatives, the Authority concludes
that it was a way of signalling to potential clients that the Firm was willing to
countenance improper market conduct in order to advance their interests.
4.13. Following this meeting, none of the attendees raised any concerns with the Firm’s
MLRO or to any other senior manager. In addition, no concerns were raised to Head
Office or via the Firm’s whistle-blowing procedures.
Iterations of the Presentation
4.14. Later that day, 13 September 2017, Mr Bolelyy emailed the attendees of the earlier
meeting to request their “credible, high-level ideas re: a possible transaction
structure” and asked that they “jot something coherent down.” . He explained that
what he described as the “winning idea” would go into a presentation, the drafting
of which he would take care of, and that it would be shared and discussed at a
“high level”, which the Authority infers meant at least Mr Rowland, who was copied
into this request.
4.15. On 14 September 2017, Mr Bolelyy emailed a draft of the Presentation to Mr
Rowland and stated as follows: “Attached is a work in progress based on fragments
of information exchanged so far. As discussed yesterday, it will be useful for all of
us to sit down and nail down the basic skeleton. When can you do today?”.
4.16. This version of the Presentation included further details of the Strategy specifically
regarding the stated aim of putting pressure on the Qatari Riyal to such an extent
that the Qatar National Bank would need to deploy significant portions of Qatar’s
foreign exchange reserves to maintain its value in relation to the US Dollar.
4.17. This version of the Presentation also explicitly stated that “maintaining the
[currency] peg requires extensive use of central bank foreign exchange reserves.
Existing G$15bn [sic] of Qatari bonds represent close to 50% of all central bank
reserves available” and noted that “the selling pressure [generated by the Strategy]
creates upward pressure on the Qatari Riyal-US Dollar peg and forces Qatar
National Bank to defend it by decreasing available foreign exchange reserves”.
4.18. The Presentation envisaged the purchasing of Qatari bonds, deployment of long
CDS and long credit forwards with the express aim of negatively impacting the
value of the Qatari Riyal against the US Dollar.
4.19. Later on 14 September 2017, in response to Mr Bolelyy’s previous request for
contributions to what he described as ‘a possible transaction structure’, and in the
knowledge that Mr Bolelyy was seeking “credible” and “coherent” ideas to go into
a presentation to be discussed at a “high level”, Mr Weller emailed a document to
Mr Bolelyy which contained his ideas, without expressing any reservations about
his contribution being disseminated more widely or presented as coherent or
credible. The document was entitled “Setting Fire to the Neighbour’s House fund”
(“the SFNH Document”) and set out more details of the Strategy, namely, to
devalue the Qatari Riyal by increasing and encouraging selling pressure. The SFNH
Document ended with a cartoon depicting Qatar and the statement “Repeat as
desired”. Mr Weller has subsequently stated that the SNFH Document reflected
what had been discussed amongst the participants at the meeting on the previous
day, together with some research he had conducted through open sources on the
internet. In addition, he stated that he did not regard the contents of the SFNH
Document as representing a serious proposal and that it was simply reflective of a
subject Mr Rowland wished to explore.
4.20. The steps set out in the SFNH Document proposed to “[q]uietly pick up some Qatar
paper”, or bonds “2026s and 2030s”, using “old school account painting” to “get
some ownership” which would be used to “[c]ontrol the yield curve” by co-operating
parties “acting in concert” trading back and forth at incrementally lower prices. The
final step in this stage would be to “dump” these holdings on the open market,
driving the bond “price further down and [to be then] picked back up [by] the
original seller”.
4.21. Following this, the plan was to “[e]stablish positions in Forwards on Riyal, options
where possible”, (…) “get long the CDS slowly with larger houses, just enough to
move the price to make it news worthy”.
4.22. Next, “[f]ire up the PR machine… to remind people there is [a] problem with
Qatar…”. A further increase of the CDS position was advised and then, “PR wave
two” stating that “despite the massive SWF [sovereign wealth fund] pressure is
building that could see Qatar having restricted access to Dollar… [and] credit rating
may be affected with the long-term future of the country now in doubt… Peg won’t
break, though credit markets will be looking shambolic…Once fire fully alight clear
out the [UAE Dirham] specs for a profit”.
4.23. Accordingly, the SFNH Document proposed a way in which the Qatari Riyal/US
Dollar currency peg might be attacked. In summary, the SFNH Document
suggested a series of steps namely: (1) building up a portfolio of specific Qatari
debt without attracting attention by parties acting in concert in a series of Wash
Trades, (2) later dumping the position in order to create a false impression in the
market of a flight from Qatari debt, (3) opening a CDS position on the debt (bonds)
and then ‘dumping’ the said debt to drive the price down (4) increasing and closing
the CDS position in order to add negative pressure on Qatari
assets/currency/economy, to profit from the manipulative bond trading, and
increasingly stressed markets, and (5) using a PR campaign deliberately magnifying
the false impression to increase selling of the Qatari Riyal or Qatari bond holdings
and encourage other market participants to do likewise.
4.24. In the evening of 14 September 2017, Mr Bolelyy took most of the content from
the SFNH Document and added it to the draft Presentation, including the content
set out in the bullet points in the paragraph below.
4.25. Thereafter until 18 September 2017 Mr Bolelyy actively worked on the Presentation.
At some point during this period Mr Weller looked at enough of the then current
draft of the document to correct a typographical error. This was yet another
opportunity for him (as an SMF 21) to warn Mr Bolelyy that the obviously improper
content taken from the SFNH Document should not be disseminated more widely
(including outside the Firm) or presented as coherent or credible, but Mr Weller did
not do so. The final form of the Presentation was entitled “Distressed Countries
Fund” and set out in detail the Strategy, which included the following:
•
“To preserve integrity of existing Qatari bond holdings, an in-situ transfer will
be arranged into a protected cell company”;
•
“Gear up to control the yield (and thus bond prices)” by purchasing “medium
and long-term Qatar paper”, as it “should favourably affect CDS pricing at later
stage”;
•
“Establish a crossing transaction arrangement whereby another affiliated party
sells the same bond holdings back to the original seller and thereby creates
additional downward pressure”;
•
“Purchase CDS on Qatar (…) to move the price sufficiently to make it
newsworthy”;
•
“Fire up the PR Machine to remind people there is a problem with Qatar”;
•
“Increase the positions”, by “buying additional CDS” to lead to “falling of bond
price, raising rates, and escalation in CDS premia”;
•
“Refresh the PR message to add more fuel to the fire”, as it will “focus on the
prospect of restricted access to US Dollar and now-doubtful stability of the
country;
•
“FIFA Option…Qatar has committed to $200BN of spending for its hosting of
2022 World Cup…negative publicity can resurface around the original award of
the tournament…If Qatar now spends its reserves on protecting the currency
and domestic credit markets, there is less dry powder to fund the infrastructure
spending”.
4.26. The finalised Presentation therefore outlined how to impact the economy of Qatar
negatively through manipulative trading practices, including direct reference to
crossing transactions between two parties working in conjunction with the stated
aim of artificially driving down the price of Qatari government-backed bonds,
therefore weakening Qatar financially, in other words Wash Trades. The Strategy
included a coordinated PR strategy designed to increase the pressure placed upon
Qatar in addition to the existing sanctions and force the Qatari government to utilise
its central bank foreign exchange reserves to maintain the currency peg between
the Qatari Riyal and the US Dollar. All of which were key concepts set out by Mr
Weller in the SFNH Document. As such the Presentation clearly contemplated
manipulative trading which aimed to create a false or misleading impression as to
the market in or the price of Qatari bonds which, if conducted in the UK could
amount to a criminal offence (contrary to section 90 of the Financial Services Act
2012).
What then happened to the Presentation
4.27. On 18 September 2017, in preparation for a scheduled visit to Abu Dhabi by Mr
Rowland, David Rowland and Mr Bolelyy, Mr Bolelyy emailed a copy of the
Presentation to his personal email account and, at Mr Rowland’s request, printed
two copies for Mr Rowland to take with him to Abu Dhabi.
4.28. Following a request from Mr Rowland to send him a soft copy of “the Qatar
presentation in the morning”, Mr Bolelyy also emailed him the final version of the
Presentation at approximately 7pm on 18 September 2017. Mr Bolelyy informed Mr
Rowland that it was the latest version and the same as Mr Bolelyy had given him
that afternoon for review.
4.29. Mr Rowland immediately forwarded the Presentation to Individual A, with whom he
had had a meeting at the Firm’s London Branch five days earlier. He also forwarded
a copy of the Presentation to David Rowland.
4.30. Mr Rowland explained in interview with the Authority that he requested Mr Bolelyy
to print copies of the Presentation “because it was related to the UAE” and
confirmed that the Abu Dhabi trip was an opportunity potentially to discuss the
Presentation with senior individuals, including from an Abu Dhabi sovereign wealth
fund. During the trip, Mr Bolelyy provided a copy of the Presentation to an employee
of this Abu Dhabi sovereign wealth fund.
4.31. For an authorised firm to contemplate such a course of action (including
recommending conduct which could be a criminal offence if it took place in the UK),
intending it to be presented to potential investors indicates a clear lack of integrity.
This is regardless of whether the Strategy set out in the Presentation was
achievable in reality (either by the Firm or by potential investors or recipients of
the Presentation). Mr Weller knowingly made significant contributions to the
Presentation’s creation.
Press reports and the Firm’s response
4.32. Mr Rowland, David Rowland and Mr Bolelyy visited Abu Dhabi from 21 to 25
September 2017. The Presentation was later reported in the media to have reached
the email inbox of the UAE Ambassador to the US between 18 September and 12
October 2017 and was said to have been stored under the heading “Rowland
Banque Havilland”. The UAE Ambassador to the US subsequently stated to the
Firm’s legal advisers in New York (through his own legal advisers) that he “did not
receive the Presentation”. The Presentation eventually became publicly available
on the internet (see below).
4.33. On 12 October 2017, as part of a pattern of sending press reports regarding Qatar
to the attendees of the 13 September 2017 meeting, Mr Weller discovered an article
by an Indian media organisation called the Business Standard, entitled “Gulf Crisis
may affect Qatar’s security, India’s economic interests” (“the Indian Article”).
4.34. The Indian Article referred to leaked or stolen emails from the Firm allegedly found
in the in-box of the UAE Ambassador to the US. The article claimed that these
emails revealed an “economic warfare strategy” which involved “setting up a
confidential commercial entity with sizeable size to buy certificate of deposits (CDs)
of Qatari banks, then selling the CDs back to original sellers at a lower price,
thereby reducing the market pricing. Negative global public relations campaign is
done, showing instability in Qatar as a key reason for this downward pressure on
CDs pricing. This will ultimately either force Qatar’s financial ministry to either
break the currency peg, or at least spend a lot of dollar reserves to maintain their
pricing when panic initiates global buyers to sell Qatari Riyal.” The article stated
that ”David Rowland (…) could be serving UAE’s interests in the ongoing spat. He
is the man behind the meteoric rise of Banque Havilland…”.
4.35. At 12.35pm on 12 October 2017 Mr Weller emailed a link to the Indian Article to
Mr Rowland, who had by then resumed his position as Chief Executive of the London
Branch. Mr Rowland responded shortly afterwards with “made me laugh”.
4.36. At 3.02pm, Mr Weller sent a further email to Mr Rowland saying, “trending on Qatari
twitter as I type” with an image from the social media site, Twitter, showing the
following: “#UAE targeted #Qatar’s Economy using… Rowland’s Banque Havilland
amid #GulfCrisis…”.
4.37. Neither Mr Weller nor Mr Rowland forwarded either email to the Firm’s Compliance
officer, or to the Head Office, or took any other steps to inform other senior
management of the allegations. In addition, neither individual, nor anyone else at
the Firm, informed the Authority of these concerns.
4.38. On 9 November 2017, the Intercept published the Intercept Article stating that the
Presentation had been found in the inbox of the UAE Ambassador to the US and
providing copies of some of the Presentation slides. The article was titled “Leaked
Documents Expose Stunning Plan To Wage Financial War On Qatar (…)” and
explained that “economic warfare involved an attack on Qatar’s currency using
bond and derivatives manipulation….The outline, prepared by Banque Havilland,
(…) laid out a scheme to drive down the value of Qatar’s bond and increase the
cost of insuring them, with the ultimate goal of creating a currency crisis that would
drain the country’s cash reserves”.
4.39. The content of the pages featured in the Intercept Article, including the content
from Mr Weller’s SFNH document, were identical to the Presentation as sent by the
Firm to Individual A and David Rowland on 18 September 2017. The Intercept
Article identified Mr Bolelyy as the creator of the Presentation, according to the
metadata of the document obtained by the Intercept.
4.40. The publication of the Intercept Article led to the immediate resignation of Mr
Bolelyy on 9 November 2017, and an internal investigation was initiated by Head
Office on 13 November 2017.
4.41. The Firm, via Mr Rowland, contacted the Authority on 14 November 2017 by
telephone, providing limited information regarding the events referred to above
and the involvement of the Firm. This was followed up by an email from Mr Rowland
to the Authority on 15 November 2017 noting what was said in the call, as follows:
“1. An article mentioning a junior analyst name [sic] for the creation of a non bank
presentation. 2. A forensic investigation being held. 3. The groups [sic] regulator
CSSF was informed. 4. The PR firm the group uses has clarified the facts. 5. We
will share the findings of the investigation once complete subject to CSSF approval”.
4.42. On 13 December 2017 Mr Rowland resigned as an employee, Chief Executive of the
London Branch and member of the executive management of the Firm with
immediate effect, and Mr Weller left the Firm on 10 April 2018.
5.
FAILINGS
5.1.
The statutory and regulatory provisions relevant to this Notice are referred to in
Individual Conduct Rule 1: You must act with integrity
5.2.
Individual Conduct Rule 1 required Mr Weller to act with integrity in relation to the
performance by him of functions relating to the carrying on of activities (whether
or not regulated activities) by the Firm. During the Relevant Period, Mr Weller
breached this requirement, whilst acting as an approved senior manager of the
London Branch (SMF21) by contributing to the creation of the Presentation
(via the SFNH Document) with a series of steps that recommended engaging in
obviously improper conduct.
5.3.
Mr Weller failed to act with integrity because both the SFNH Document (which Mr
Weller drafted and provided to Mr Bolelyy) and the Strategy set out a multi-faceted
approach that included conduct aimed at creating a false or misleading impression
as to the market in or the price of Qatari bonds, with the objective of harming the
economy of Qatar. Mr Weller acted recklessly in making a significant contribution
to the Presentation in circumstances where he was aware that there was a material
risk that the Presentation would be disseminated for purposes that included
marketing the Firm’s services to potential investors (namely representatives of the
UAE and/or other states in the Middle East region, who Mr Weller knew others in
the Firm believed might have reasons to want to put economic pressure on Qatar).
In particular, he was aware that Mr Rowland hoped the Presentation would generate
fees for Rowland Family interests. Accordingly, in the circumstances known to Mr
Weller, it was unreasonable for him to take this risk.
Not Fit and Proper
5.4.
The Authority considers that Mr Weller’s actions as described in this Notice
demonstrate that he lacks fitness and propriety because he lacks integrity.
6.
SANCTION
Financial penalty
6.1.
The Authority’s policy for imposing a financial penalty is set out in Chapter 6 of
DEPP. DEPP 6.5B sets out the details of the five-step framework that applies in
respect of financial penalties imposed on individuals in non-market abuse cases.
Step 1: disgorgement
6.2.
Pursuant to DEPP 6.5B.1G, at Step 1 the Authority seeks to deprive an individual
of the financial benefit derived directly from the breach where it is practicable to
quantify this.
6.3.
The Authority has not identified any financial benefit that Mr Weller derived directly
from his breach.
6.4.
Step 1 is therefore £0.
Step 2: the seriousness of the breach
6.5.
Pursuant to DEPP 6.5B.2G, at Step 2 the Authority determines a figure that reflects
the seriousness of the breach. That figure is based on a percentage of the
individual’s relevant income. The individual’s relevant income is the gross amount
of all benefits received by the individual from the employment in connection with
which the breach occurred, and for the period of the breach.
6.6.
As Mr Weller’s breach lasted less than 12 months, the relevant income will be that
earned by him in the 12 months preceding the last day of his breach, being 13
November 2017. The Authority considers Mr Weller’s relevant income for this
period to be £200,000.
6.7.
In deciding on the percentage of the relevant revenue that forms the basis of the
Step 2 figure, the Authority considers the seriousness of the breach and chooses a
percentage between 0% and 40%. This range is divided into five fixed levels which
represent, on a sliding scale, the seriousness of the breach; the more serious the
breach, the higher the level. For penalties imposed on individuals in non-market
abuse cases there are the following five levels:
Level 1 – 0%
Level 2 – 10%
Level 3 – 20%
Level 4 – 30%
Level 5 – 40%
6.8.
In assessing the seriousness level, the Authority has taken into account various
factors which reflect the impact and nature of the breach, including that he held a
senior position in the Firm and assisted a more junior members of staff (Mr Bolelyy)
in committing a breach; and whether it was committed deliberately or recklessly.
6.9.
DEPP 6.5B.2G(11) lists factors tending to show the breach was reckless. Of those,
the Authority considers the following factor to be the most relevant:
6.9.1.
Mr Weller appreciated there was a risk that his actions in making a
significant contribution to the Presentation could result in a breach and
he failed adequately to mitigate that risk.
6.10. DEPP 6.5B.2G(12) lists factors which are likely to be considered ‘level 4 or 5
factors’. Of these, the Authority considers the following factors to be most relevant:
6.10.1.
Mr Weller knew there was a material risk the Presentation would be used
to encourage conduct which potentially could be a criminal offence, and
financial crime, were it to take place in the UK;
6.10.2.
Mr Weller failed to act with integrity; and
6.10.3.
the breach was committed recklessly.
6.11. DEPP 6.5B.2G(13) lists factors likely to be considered ‘level 1, 2 or 3 factors’. Of
these, the Authority considers the following factor to be relevant:
6.11.1.
Mr Weller made no profit as a result of the breach.
6.12. Taking all of these factors into account, the Authority considers the seriousness of
the breach to be level 4 and has determined that the appropriate Step 2 figure is
30% of £200,000.
6.13. Step 2 is therefore £60,000.
Step 3: mitigating and aggravating factors
6.14. Pursuant to DEPP 6.5B.3G, at Step 3 the Authority may increase or decrease the
amount of the financial penalty arrived at after Step 2, but not including any
amount to be disgorged as set out in Step 1, to take into account factors which
aggravate or mitigate the breach.
6.15. The Authority considers that there were no aggravating factors to the breach.
6.16. The Authority consider that the following factor mitigates the breach:
6.16.1.
The degree of co-operation Mr Weller showed during the investigation of
the breach by the Authority.
6.17. Having considered this factor, the Authority considers that the Step 2 figure should
be subject to a 10% discount at Step 3. This decreases the figure at Step 3 to
£54,000.
Step 4: adjustment for deterrence
6.18. Pursuant to DEPP 6.5B.4G, if the Authority considers the figure arrived at after Step
3 is insufficient to deter the individual who committed the breach, or others, from
committing further or similar breaches, then the Authority may increase the
penalty.
6.19. The Authority considers that the Step 3 figure of £54,000 is sufficient in relation to
the breaches to meet its objective of credible deterrence.
6.20. Step 4 is therefore £54,000.
Step 5: settlement discount
6.21. Pursuant to DEPP 6.5B.5G, if the Authority and the individual on whom a penalty is
to be imposed agree the amount of the financial penalty and other terms, DEPP 6.7
provides that the amount of the financial penalty which might otherwise have been
payable will be reduced to reflect the stage at which the Authority and the individual
reached agreement.
6.22. Mr Weller and the Authority did not reach an agreement so no discount applies to
the Step 4 figure. The Step 5 figure is therefore £54,000.
6.23. The Authority has therefore decided to impose a total financial penalty of £54,000
on Mr Weller for breaching Individual Conduct Rule 1 (COCON 2.1.1R).
6.24. As stated above the Authority considers that Mr Weller’s actions as described in this
Notice demonstrate that he lacks fitness and propriety because he lacks integrity.
As such, the Authority believes that it is appropriate to prohibit Mr Weller from
performing any function in relation to any regulated activity carried on by any
authorised person, exempt person or exempt professional firm.
7.
REPRESENTATIONS
7.1.
Annex B contains a brief summary of the key representations made by Mr Weller,
and by David Rowland as a third party, in response to the Warning Notice and how
they have been dealt with. In making the decision which gave rise to the obligation
to give this Notice, the Authority has taken account of all of the representations
made by Mr Weller, and by David Rowland as a third party, whether or not set out
in Annex B.
8.
PROCEDURAL MATTERS
8.1.
This Notice is given under sections 57 and 67 of the Act and in accordance with
section 388 of the Act.
Decision maker
8.2.
The decision which gave rise to the obligation to give this Notice was made by the
RDC. The RDC is a committee of the Authority which takes certain decisions on
behalf of the Authority. The members of the RDC are separate to the Authority staff
involved in conducting investigations and recommending action against firms and
individuals. Further information about the RDC can be found on the Authority’s
committee-rdc
The Tribunal
8.3.
Mr Weller has the right to refer the matter to which this Notice relates to the
Tribunal. Under paragraph 2(2) of Schedule 3 of the Tribunal Procedure (Upper
Tribunal) Rules 2008, Mr Weller has 28 days from the date on which this Notice is
given to him to refer the matter to the Tribunal. A reference to the Tribunal is made
by way of a signed reference notice (Form FTC3) filed with a copy of this Notice.
The Tribunal’s contact details are: Upper Tribunal, Tax and Chancery Chamber,
Fifth Floor, Rolls Building, Fetter Lane, London EC4A 1NL (tel: 020 7612 9730;
email: fs@hmcts.gsi.gov.uk).
8.4.
Further information on the Tribunal, including guidance and the relevant forms to
complete, can be found on the HM Courts and Tribunal Service website:
8.5.
A copy of Form FTC3 must also be sent to the Authority at the same time as filing
a reference with the Tribunal. A copy should be sent to Victoria Chaloyard at the
Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.
8.6.
Once any such referral is determined by the Tribunal and subject to that
determination, or if the matter has not been referred to the Tribunal, the Authority
will issue a final notice about the implementation of that decision.
Access to evidence
8.7.
Section 394 of the Act applies to this Notice.
8.8.
The person to whom this Notice is given has the right to access:
(1) the material upon which the Authority has relied in deciding to give this
Notice; and
(2) the secondary material which, in the opinion of the Authority, might
undermine that decision.
Third party rights
8.9.
A copy of this Notice is being given to David Rowland as a third party identified in
the reasons above and to whom in the opinion of the Authority the matter to which
those reasons relate is prejudicial. As a third party, David Rowland has similar
rights to those mentioned in paragraphs 8.3 and 8.8 above in relation to the
matter which identifies him.
Confidentiality and Publicity
8.10. This Notice may contain confidential information and should not be disclosed to a
third party (except for the purpose of obtaining advice on its contents). In
accordance with section 391 of the Act, a person to whom this Notice is given or
copied may not publish the Notice or any details concerning it unless the Authority
has published the Notice or those details.
8.11. However, the Authority must publish such information about the matter to
which a Decision Notice or Final Notice relates as it considers appropriate. The
persons to whom this Notice is given or copied should therefore be aware that
the facts and matters contained in this Notice may be made public.
Authority Contacts
8.12. For more information concerning this matter generally, contact
Victoria Chaloyard at the Authority: direct line: 020 7066
3108/email: victoria.chaloyard@fca.org.uk.
Chair, Regulatory Decisions Committee
ANNEX A
RELEVANT STATUTORY PROVISIONS
1.1.
The Authority’s operational objectives, set out in section 1B(3) of the Act, include
the integrity objective of protecting and enhancing the integrity of the UK financial
system which includes it not being used for a purpose connected with financial
crime.
1.2.
Section 56 of the Act provides that the Authority may make a prohibition order if it
appears to the Authority that an individual is not a fit and proper person to perform
functions in relation to a regulated activity carried on by an authorised person,
exempt person, or a person to whom, as a result of Part 20, the general prohibition
does not apply in relation to that activity. Such an order may relate to a specified
regulated activity, any regulated activity falling within a specified description, or all
regulated activities.
1.3.
Section 66 of the Act provides that the Authority may take action against a person
if it appears to the Authority that he is guilty of misconduct and the Authority is
satisfied that it is appropriate in all the circumstances to take action against him.
1.4.
Section 66A of the Act provides that for the purposes of action by the Authority
under section 66, a person is guilty of misconduct if any of conditions A to C is met
in relation to the person. Section 66A(2) sets out Condition A, which during the
Relevant Period stated that:
‘(a) the person has at any time failed to comply with rules made by the FCA under
section 64A, and
(b) at that time the person was –
(i) an approved person,
(ii) an employee of a relevant authorised person, or
(iii) a director of an authorised person.’
1.5.
Section 66(3)(a) and (b) of the Act provides that if the Authority is entitled to take
action against a person under section 66, it may impose a penalty on him of such
amount as it considers appropriate, or publish a statement of his misconduct.
1.6.
Section 1H of the Act provides:
“(3)
“Financial crime” includes any offence involving
(a) fraud or dishonesty,
(b) misconduct in, or misuse of information relating to, a financial market.
(4) “Offence” includes an act or omission which could be an offence if it had taken
place in the United Kingdom.”
1.7
Section 90 of the Financial Services Act 2012 provides that:
“(1) a person (“P”) who does any act or engages in any course of conduct which
creates a false or misleading impression as to the market in or the price or
value of any relevant investments commits an offence if—
(a)
P intends to create the impression, and
(b)
the case falls within subsection (2) or (3) (or both).
(2)
The case falls within this subsection if P intends, by creating the impression,
to induce another person to acquire, dispose of, subscribe for or underwrite
the investments or to refrain from doing so or to exercise or refrain from
exercising any rights conferred by the investments.
(3)
The case falls within this subsection if—
(a)
P knows that the impression is false or misleading or is reckless as
to whether it is, and
(b)
P intends by creating the impression to produce any of the results in
subsection (4) or is aware that creating the impression is likely to
produce any of the results in that subsection.
(4)
Those results are—
(a)
the making of a gain for P or another, or
(b)
the causing of loss to another person or the exposing of another person
to the risk of loss.”
1.8
Article 53(1) of the Regulated Activities Order provided that advising a person is a
specified kind of activity if the advice is-
(a) given to the person in his capacity as an investor, or potential investor, or in
his capacity as agent for an investor or a potential investor; and
(b) advice on the merits of his doing any of the following (whether as principal or
agent)-
(i). buying, selling, subscribing for or underwriting a particular investment
which is a security, structured deposit or a relevant investment, or
(ii). exercising any right conferred by such an investment to buy, sell,
subscribe for or underwrite such an investment.
1.9
Section 22(1) of the Act provides that an activity is a regulated activity for the
purpose of the Act if it is an activity of a specified kind which is carried on by way
of business and (a) relates to an investment of a specified kind.
2.
RELEVANT REGULATORY PROVISIONS
2.1.
The Code of Conduct Sourcebook (COCON) was issued under section 64A of the
Act. COCON sets out the rules of conduct which apply to individuals within the scope
of COCON, which during the Relevant Period included SMF managers according to
COCON 1.1.2R(1).
2.2.
COCON 1.1.6R provides that in relation to ’a person (P) who is an approved person,
COCON applies to the conduct of P in relation to the performance by P of functions
relating to the carrying on of activities (whether or not regulated activities) by the
firm on whose application approval was given to P’.
Individual conduct rules
2.3.
Chapter 2 of COCON sets out the Individual Conduct Rules. COCON 2.1.1R
(individual Conduct Rule 1) provides that a person must act with integrity.
The Fit and Proper Test for Employees and Senior Personnel (“FIT”)
2.4.
The part of the Authority’s Handbook entitled “The Fit and Proper Test for Approved
Persons” sets out the criteria that the Authority will consider when assessing the
fitness and propriety of a candidate whom the firm is proposing to put forward for
approval as an FCA-approved SMF manager. FIT is also relevant in assessing the
continuing fitness and propriety of a person approved to perform the function of an
FCA-approved SMF manager.
2.5.
FIT 1.3.1G states that the Authority will have regard to a number of factors when
assessing the fitness and propriety of a person. In the Authority’s view, the most
important considerations will be the person’s honesty, integrity and reputation;
competence and capability; and financial soundness.
Enforcement Guide (“EG”)
2.6.
The Authority’s policy for exercising its power to make a prohibition order is set out
in Chapter 9 of EG.
2.7.
EG 9.1 states that the Authority may exercise this power where it considers that,
to achieve any of its regulatory objectives, it is appropriate either to prevent an
individual from performing any functions in relation to regulated activities or to
restrict the functions which he may perform.
Decision Procedure and Penalties Manual (“DEPP”)
2.8.
Chapter 6 of DEPP, which forms part of the Authority’s Handbook, sets out the
Authority’s statement of policy on the imposition of a financial penalty or public
censure. In particular, DEPP 6.5B sets out the five steps for penalties imposed on
individuals in a non-market abuse case in respect of conduct taking place on or
after 6 March 2010.
ANNEX B: REPRESENTATIONS
1. A summary of the key representations made by Mr Weller and by the third party,
David Rowland, and the Authority’s conclusions in respect of them (in bold type),
is set out below.
Mr Weller’s Representations
2. The basis of the allegations is that Mr Weller was aware1, or must have been
aware, of a material risk2 that the Presentation would be used to market the Firm.
No such possibility crossed Mr Weller’s mind. To establish liability, there needs to
be a finding that it was more likely than not that Mr Weller was subjectively aware
that there was a material risk that the Presentation was intended as a marketing
document or to benefit the Firm in some way. Mr Weller noted the inherent
probabilities of the situation in the case and referred to the following judicial
comment in Re H “the more serious the allegation the less likely it is that the event
occurred and, hence, the stronger should be the evidence before the court
concludes that the allegation is established on the balance of probability”3.
3. It is inherently unlikely that a person with no history of reckless disregard of risks
and nothing to gain by making proposals for market manipulation would assist in
what he thought might be the promotion of the Firm via a document setting out a
market manipulation strategy. This is particularly so when the “advice” is
acknowledged to be unrealistic. Mr Weller knows that manipulative trading is
improper. Mr Weller has never had a client complaint or any disciplinary or
regulatory action against him over the course of a long career. In addition, Mr
Weller has a history of promoting compliance issues, including when that made him
unpopular with his employer. It has not been alleged that Mr Weller stood to make
any personal gain from these matters.
4. Mr Weller is thus a person with a history of doing the right thing in compliance
terms, even when it was not in his personal interest to do so and his actions
attracted criticism.
1 Not should have been aware i.e. “objective” recklessness.
2 A person acts 'recklessly' with respect to: (i) a circumstance when he is aware of a risk that it exists or will
exist; (ii) a result when he is aware of a risk that it will occur and it is, in the circumstances known to him,
unreasonable to take the risk." R v G [2004] 1 AC 1034
3 Lord Nicholls of Birkenhead in Re H (Minors) [1996] AC 563, at 586-7.
5. The Authority considers that, after a request from Mr Rowland, Mr Weller
drafted an obviously improper manipulative trading strategy which was
aimed at undermining the Qatari currency. This was with a view to it being
discussed by senior people within the Firm (who he knew were well
connected in the UAE and would generally be seeking to advance the
interests of the Firm). He did so without any legitimate reason and
without: (a) making any enquiries or seeking any assurances as to exactly
who would discuss the strategy and why; (b) making clear he thought the
strategy contained in the SFNH Document was unrealistic and not to be
taken seriously (failing to take into account that the strategy in the SFNH
document could have been subsequently refined, after discussion, into
something more realistic); and/or (c) expressing any stipulation that his
ideas were for ‘internal’ discussion only.
6. The Authority has concluded that Mr Weller knew there was a material risk
that the Presentation would be disseminated for purposes which included
marketing the Firm’s services to investors or potential investors. The
Authority has further concluded that the Presentation was disseminated
to an Abu Dhabi sovereign wealth fund. In the absence of Mr Weller taking
reasonable steps to ensure his ideas for manipulative trading to
manipulate the Qatari currency would go no further (including that they
would not be discussed outside the Firm), the Authority considers that, in
the circumstances known to him, it was unreasonable for Mr Weller to take
that risk.
7. The Authority considers that such behaviour by a senior approved person
amounted to recklessness.
Mr Weller’s appreciation of the “Risk”
8. The genesis of Mr Weller’s SFNH document was around 13 September 2017 when
Mr Rowland asked him to join him in a meeting with Mr Bolelyy, with another
employee of the Firm and with an individual not employed by the Firm. The nature
of the conversation at that meeting did not suggest to Mr Weller that Mr Rowland
thought that the Firm, or the Rowland Family, was going to be, or attempting to
become, involved in any attack on the Qatari economy. Mr Rowland was not talking
seriously, and no-one took the discussion seriously. There is no evidence that Mr
Rowland appeared to be taking matters more seriously than anyone else. It was
not “a real thing”. Mr Weller made clear his view that the very idea of such an
attack was ludicrous and impossible. Even if Mr Rowland did actually intend the
slides to be “a way of signalling to potential clients that the Firm was willing to
countenance improper market conduct in order to advance their interests”, it did
not occur to Mr Weller that this was a possibility. Nor did it occur to Mr Weller,
when he was later asked to write down his ideas, that this might be in connection
with any form of marketing exercise.
9. Mr Rowland’s reference to “potentially being able to charge a small fee on the assets
put into a vehicle” was no more realistic than any other part of the conversation
during the meeting on 13 September 2017. Any talk of a fee on the assets was not
serious. Accordingly, Mr Weller did not conclude from the reference to the small fee
that Mr Rowland was contemplating using the ideas discussed to market the Firm.
The Firm was a small private bank, customers being individuals and family trusts.
It was not an investment bank and was not providing services to states or state
agencies. The Firm could not have assisted, even if the plan had been remotely
realistic.
10. Following the meeting on 13 September 2017, Mr Bolelyy sent an email to Mr Weller
and others4 stating, inter alia, that he (Mr Bolelyy) would “like us to assemble one
or two credible, high-level ideas” and he was to prepare “a presentation that will
be shared and discussed at a high level”. Mr Weller understood that the “high level”
referred to members of the Rowland Family and perhaps one other person (who
had worked closely with the family for a very long time). He thought it would go no
further. This is what led to Mr Weller putting together his SFNH Document. Mr
Weller did not understand this related to any plan under serious consideration and
was not aware that this had any connection with any trip that Mr Rowland and Mr
Bolelyy might make to the UAE. Mr Weller took the email as a request to type up a
discussion he viewed as ludicrous and completely unrelated from reality.
11. The document Mr Weller subsequently prepared, and its title “Setting Fire to the
neighbours house Fund” [sic] was informal and not proof-read. He spent a short
time creating a short, jokey document. Mr Weller did not consider that the SFNH
Document contained credible ideas (as its title reveals). It would have been
similarly fool-hardy for Qatar’s neighbours to attempt to attack the country’s
economy, even if it had been plausible that they might try. Not only would they
risk losing all of the $23bn of the Qatari bonds they held but, as Mr Weller’s
document recognises, there would be risk of serious jeopardy to their own
currencies. The idea that anyone would establish a “Fund” for this was nonsensical.
4 See page 5 for the full text of the email
Accordingly, the SFNH document is inconsistent with Mr Weller having understood
that he was being asked to send something credible and coherent, which could be
used in a document to be sent to prospective clients. The SFNH Document is
certainly not credible, and it is barely coherent.
12. If Mr Weller thought there was a risk of what was discussed with Mr Rowland and
the others being implemented or used for marketing, he would not have been
prepared to be involved. It is also not credible that Mr Weller would have created a
document like the SFNH Document, if he thought that it was likely to be used as
the basis for a marketing document. Its format and style are not appropriate for a
client presentation or useful for being turned into such a document. Proposing such
conduct would not be good marketing or a way of making a good impression on
anyone. This is directly relevant to Mr Weller’s perception of the risk that the
Presentation would be used for marketing illegality.
13. Mr Weller did not think the Presentation would be sent outside the Rowland Family
circle, nor did he see any connection between it and with advancing the Rowland
Family’s interests. Accordingly, he was not aware of the risk that the Presentation
would be disseminated for purposes that included marketing the Firm’s services to
potential investors. There was therefore no need for Mr Weller (or indeed anyone
else) to report anything to Compliance.
14. Mr Weller was not “enthusiastic” about the task. The style, format and content of
the SFNH Document is only consistent with Mr Weller having spent the little time
on it he says he did. It is not the work of an enthusiastic person who views himself
as contributing to a plan that will be implemented in the real world. Whether or not
Mr Weller found the discussion interesting or not, does not indicate that Mr Weller
thought the slides Mr Bolelyy prepared were intended as any form of marketing.
15. Mr Weller’s reaction to the Indian Article on 12 October 2017 does not indicate a
lack of surprise that his ideas had “got out of the building”. He promptly forwarded
it to Mr Rowland, as he thought Mr Rowland should be aware of the article. Mr
Rowland’s response to his email (“Made me laugh”) indicated that Mr Rowland was
unconcerned. Mr Weller would have expected Mr Rowland to react very differently,
if there had been anything in the report to be concerned about. Mr Weller had not
previously heard of the Indian media organisation, the Business Standard, and he
concluded that there was no truth in the story. There was nothing in the Indian
Article which caused Mr Weller to think that either his SFNH Document or the
Presentation had been sent to anyone outside the Rowland Family circle.
16. However, Mr Weller was surprised when he saw the article in The Intercept
published on 9 November 2017. His main thought was “What the hell is it doing
where it is?”. Mr Weller was amazed on looking at the Intercept Article at the idea
that the Presentation itself had apparently been received by the UAE Ambassador.
17. The Authority has concluded that Mr Weller was aware of the risk that the
Presentation might be discussed with parties external to the Firm, and that
it might be used to market the Firm’s services to potential investors.
18. Mr Weller knew the Rowland Family had close links to the Crown Prince of
Abu Dhabi and was aware of the tension between Qatar and its
neighbours; and from on or around 31 August 2017, Mr Weller was aware
that another senior member of the Rowland Family was interested in how
profit might be made from the political tensions impacting Qatar. At the
13 September 2017 meeting, Mr Rowland was interested in ideas to help
certain nation states conduct trading that might put pressure on Qatar and
the potential for “being able to charge a small fee on the assets put in a
vehicle”. Accordingly, Mr Weller understood that the ideas discussed at the
13 September 2017 meeting might be shared more widely amongst the
Rowland Family.
19. Given Mr Rowland expressly told Mr Weller he was interested in charging
a fee (which could only be obtained from potential investors), Mr Weller’s
own view of Mr Rowland as an “excitable, overly optimistic and unrealistic
character” and Mr Weller’s previous discussion with the other senior
member of the Rowland Family, the Authority considers that Mr Weller
appreciated there was a risk that Mr Rowland was interested in discussing
the forthcoming ideas with potential investors.
20. Following the meeting on 13 September 2017, Mr Bolelyy sent an email to
Mr Weller and the others attending the meeting, copying Mr Rowland, on
13 September 2017 stating the following (emphasis added):
I would really like us to assemble one or two credible, high-level
ideas re: a possible transaction structure.
The “winning idea” will then go into a presentation that will be
shared and discussed at a high level, so I am aiming to have the first
draft this Friday.
I will take care of how this content will be presented but, for now, I
would really like for all of us to sit down and jot something coherent
down.
Please have a further think and let’s reconvene tomorrow.
As always, many thanks for your contribution.
21. The risk (at least) that Mr Rowland was not treating the matters discussed,
in the meeting of 13 September 2017, as hypothetical and ridiculous was
highlighted by Mr Bolelyy’s email to Mr Weller and the others attending
the meeting sent shortly after the meeting. Mr Bolelyy explicitly requested
“one or two credible, high-level ideas” to go into “a presentation” and he
would need to “jot something coherent down”. However “laughy, jokey”
the discussions may have been at the 13 September 2017 meeting, there
was an obvious risk that Mr Rowland and Mr Bolelyy were not treating the
matter in the same “jokey” spirit.
22. The Authority would expect a senior manager in Mr Weller’s position,
receiving this relatively short and clear email, to have raised a number of
matters before (if at all) he formulated and circulated any ideas, as
requested. For example, for whom exactly was the presentation designed,
why was it was being prepared and how would it be made clear to those
discussing the presentation that it was not to be taken seriously? Mr
Weller asked no such questions, nor did he seek to decline to provide input.
The Authority considers that Mr Weller appeared enthusiastic about the
project and that he cannot have believed that his SFNH Document was
completely “unrelated from reality”.
23. The Authority also notes Mr Bolelyy’s comment in the above email, where
he states that: “[he] will take care of how this content is prepared”. This
suggests that the informal language and tone (as in the SNFH Document)
is not, as Mr Weller asserts, inconsistent with him understanding he had
been asked to send something credible and coherent to Mr Bolelyy.
24. It is in this context that Mr Weller drafted the SNFH Document which
contained a highly improper trading strategy, setting out a proposed
course of market manipulation, including the use of wash trades, currency
manipulation and the misuse of PR agencies, with the express aim of
negatively impacting the economy of Qatar.
25. The strategy Mr Weller set out in his SFNH Document focussed on the
participation of Saudi Arabia and the UAE (which, as he knew, were Qatar’s
most prominent critics at the time) and was sensitive to the potential
impact on the UAE’s own currency. The Authority infers from this that Mr
Weller was aware of the risk that Mr Rowland was interested in presenting
the ideas to potential investors, including in the UAE.
26. Mr Weller forwarded the SFNH Document by email to Mr Bolelyy on 14
September 2017 without any covering comment. Mr Weller expressed no
concern about Mr Bolelyy seeking credible/coherent ideas for a
presentation. He did not seek any assurances as to who those ideas might
be presented to or what might be done with them. Instead, according to
Mr Weller, he simply relied upon the more junior Mr Bolelyy appreciating
that the “SFNH was consciously facetious” and “not intended to be taken
seriously”. The Authority considers that it was insufficient and
unreasonable for Mr Weller to assume that Mr Bolelyy, or indeed anyone,
would not take his ideas in the SFNH Document seriously.
27. The Authority considers that creating and providing the SFNH Document,
as Mr Weller did, created an obvious risk that those to whom its ideas were
presented might treat them as credible and coherent (or might use them
to develop a similar strategy aimed at the same ends). In circumstances
where Mr Weller had not sought, or been provided with, any explanation
as to what legitimate purpose the SFNH Document might serve, the
Authority has concluded that Mr Weller was aware of the risk that Mr
Rowland might seek to use the ideas in the SFNH Document in discussions
with potential investors designed to benefit the Rowland Family interests,
including those of the Firm.
28. The Authority has concluded that Mr Bolelyy provided a copy of the
Presentation to a representative of an Abu Dhabi sovereign wealth fund
(albeit not the senior representative who was in Brazil at the time) and
that Mr Rowland knew that he had done so.
29. The Indian Article linked David Rowland and the Firm to an “economic
warfare strategy” serving the UAE’s interests involving manipulative
trading and a negative public relations campaign, in order to break Qatar’s
currency peg or to force Qatar to spend considerable dollar reserves on
maintaining it. The Authority considers that Mr Weller must have noticed
the similarities between his SFNH Document and plan described in the
Indian Article, which alleged the strategy was actually being deployed. Mr
Weller made no enquiries of and expressed no concerns to Mr Rowland or
anyone else as to how his ideas had ended up in the Indian Article, nor did
he alert the Firm’s Compliance Department. From the information
contained in the Indian Article, it must have been obvious to Mr Weller
that the same ideas he had formulated in the SFNH Document were now
being reported in the press. The ideas had, therefore, clearly gone further
than the Rowland Family, to which Mr Weller has indicated he thought his
ideas had been confined.
30. The Authority considers that Mr Weller’s decision not to express any
concerns to Mr Rowland or anyone else, and not to inform Compliance, as
to how his ideas had “got out of the building” and reached an external
audience supports the conclusion that he was always aware of the
potential for the Presentation to be disseminated for purposes that
included marketing the Firm.
31. The Authority considers that Mr Weller could not have been amazed by the
substance of the Intercept Article, namely, linking the Firm to the
“Stunning Plan to Wage Financial War on Qatar – and steal the World Cup”
because these allegations had already been made in the Indian Article
from which it was obvious that the ideas Mr Weller had formulated in the
SFNH Document had indeed “got out of the building”.
32. COCON 1.1.6R provides that COCON applies to the conduct of an approved person,
P, in relation to the performance by P of functions relating to the carrying on of
activities (whether or not regulated activities) by the firm… on whose application
approval was given to P.
33. For the purposes of a financial penalty, what is relevant is Mr Weller’s contribution
to the discussion initiated by Mr Rowland, his preparation of the SFNH document
and his correcting a typo in Mr Bolelyy’s slides. Mr Weller did not think that he was
then contributing to the provision of advice by the Firm or the marketing of its
services. Mr Weller was not performing a function relating to the provision of advice
by the Firm or to the Firm’s own marketing. To satisfy COCON 1.1.6R, there must
have been an awareness by [the approved person] that the firm is preparing advice
or at least contemplating advising. The same applies in relation to marketing: even
if Mr Weller in fact appreciated that marketing material was being created, he was
not performing a function related to marketing by the Firm, if he did not think it
was “a bank project”. Accordingly, COCON 1.1.6R is not satisfied.
34. There is no evidence that the Presentation constituted advice by, or marketing of,
the Firm. It is perfectly possible for slides to have been prepared without Mr Bolelyy
or Mr Rowland turning their mind to whether they contained advice, or whether
that advice was regulated, and therefore without any thought as to whether, if the
slides were to be used, that had to be on behalf of the Firm. The Presentation did
not mention the entity whose services are being promoted. The activities described
in the Presentation did not involve services which anyone suggests the Firm might
have performed, and the suggested intended audience were not potential
customers of the Firm.
35. The non-Bank Business nature of the Presentation is clear from, inter alia, the
•
It was not the case that all the key employees involved in the creation and
dissemination of the Presentation received salary exclusively from the Firm
during the Relevant Period. An individual not employed by the Firm actively
contributed to the Presentation and Mr Rowland’s employment status and
salary were not determinative as to whether he was acting in his Chief
Executive capacity; he was concerning himself with Rowland Family
business particularly, spending significant time working on the Financial
Institution.
•
The Firm’s standard template for presentations was not used and Mr Bolelyy
saved the various drafts onto his personal folder. The Firm’s offices and
resources were also used for the Financial Institution project.
•
Whilst the Presentation was found in a tasks folder of the UAE Ambassador
named “Rowland Banque Havilland”, the title of the folder is neutral as to
whether it contained material relating to the Firm alone or to the Rowlands
and the Firm.
36. It was the Rowland Family that had a far more direct financial interest in relations
with the UAE, namely with the establishment of the Financial Institution, than did
the Firm. Unless the slides were intended to be used on behalf of the Firm, as
opposed to the Rowland Family, they were not activity of the Firm. Mr Weller was
not performing any function in relation to the carrying on of activities by the Firm,
and COCON 2.1R is accordingly not engaged.
37. The Presentation was created in the Firm’s London Office premises, using
the Firm’s IT systems, and was disseminated from Mr Rowland’s Firm
email account. Mr Bolelyy’s email to self, dated 12 September 2017, was
sent by him to and from his email address at the Firm. In the Authority’s
view, the clearly inappropriate nature of the Presentation makes it likely
that Mr Bolelyy would not have filed it in the usual place within the Firm’s
IT systems, where it would have been accessible to other employees of
the Firm not involved in assisting with the preparation of the Presentation.
38. The salaries of Mr Weller, Mr Rowland and Mr Bolelyy were exclusively paid
by the Firm. Mr Rowland was an SMF 21 (EEA Branch Manager) of the Firm
during the Relevant Period and thereafter, up to 15 December 2017. Mr
Rowland remained a Board Member of the Firm and continued to be
influential in the London Branch. Mr Rowland was described, by another
senior member of staff as still being the “Boss” even after he formally
stood down as the Chief Executive. Although he may not have spent all his
time working on the Firm’s matters during the Relevant Period (for
example when he was working on the Financial Institution project), this
did not preclude him from spending some of his time working on matters
relating to the Firm. Mr Bolelyy’s salary was exclusively paid by the Firm;
he did not receive an income from Mr Rowland, or the Rowland Family,
directly.
39. There was one individual not employed by the Firm involved in the
Presentation’s production. However, his input appears to have been
limited to advising on football matters (i.e. not on financial services) and
the preparation of the slide regarding the “FIFA Option”. All other
personnel involved in the Presentation’s production, and in relation to the
financial services content (as opposed to the football content) were
employed by, and received a salary exclusively from, the Firm during the
Relevant Period. Receiving assistance from a person not employed by the
Firm, for a limited part of the Presentation, does not in the Authority’s view
change the nature of the document as a whole.
40. The Authority notes that the Presentation was reported to have been found
in the UAE Ambassador’s Outlook Tasks under the name of “Rowland
Banque Havilland”, appearing to indicate the origin of, or at least the
Firm’s connection with, the Presentation. The Authority has come to no
conclusions as to why it was reported that the Presentation was found in
the UAE Ambassador’s Outlook Tasks.
41. The Authority has concluded that the advice in the Presentation was
regulated activity.
42. As the Authority has determined that the regulated activity in the
Presentation was Bank Business, the Authority may impose a penalty on
Mr Weller for breach of Individual Conduct Rule 1 because his conduct
related to the performance by him of functions relating to the carrying on
of that regulated activity by the Firm (COCON 1.1.6R).
Was the Presentation given?
43. There is no basis for a finding (or therefore for proceeding on the basis) that any
presentation was in fact sent to representatives of the UAE.
44. The UAE Ambassador has expressly said that he did not receive the slides, so it
cannot be concluded that they were sent to him. The telephone call between Mr
Rowland and David Rowland, dated 19 October 2017, does not indicate that any
set of slides had been presented to or discussed with any representative of the
UAE. Instead, Mr Rowland and David Rowland were both convinced that the Indian
Article had resulted from David Rowland’s email having been hacked.
45. If the slides were not in fact given to any UAE representative, the theory that they
were marketing of any sort becomes even more improbable, and it is impossible to
maintain a case that Mr Weller’s conduct related to the performance of a function
by the Firm.
46. As requested by Mr Rowland, Mr Bolelyy printed off two copies of the
Presentation to take on their trip to Abu Dhabi, so that it could be
discussed with a representative of an Abu Dhabi sovereign wealth fund.
Mr Bolelyy signed a statement, dated 15 November 2017, saying that
during the visit he had handed one single copy of the Presentation to a
(named) senior employee of an Abu Dhabi sovereign wealth fund. On 13
November 2017 Mr Rowland confirmed that Mr Bolelyy had said to him on
21 September 2017, that he had provided the Presentation to the senior
employee. On 25 November 2017, Mr Rowland signed a statement saying
that he was made aware that Mr Bolelyy may have given the Presentation
to a junior employee at the same Abu Dhabi sovereign wealth fund.
47. Mr Bolelyy subsequently withdrew his statement that he had passed the
copy of the Presentation to the (named) senior employee. He then added
he may have given the Presentation to a junior employee. Mr Rowland
subsequently withdrew his statement.
48. Mr Rowland purported to explain why he did so. He said that he had had
no knowledge of Mr Bolelyy sharing the Presentation and he had assumed
that the Firm’s internal investigation had already determined that he had.
However, when he later learnt that the senior employee of the Abu Dhabi
sovereign wealth fund had been in Brazil at the time of the trip to Abu
Dhabi, he considered he had been mistaken.
49. The Authority refers to the telephone call between Mr Rowland and David
Rowland on 12 October 2017. In this call, David Rowland asked Mr
Rowland how he thought the “thing in the Indian paper got there”. Mr
Rowland replied “probably, I assume – probably a leak from their office I
would imagine”. Mr Rowland then says he is aware that the content of the
Presentation had been discussed with “their” office. The Authority infers
that “their office” refers to the office of the Abu Dhabi sovereign wealth
fund, which had been provided with a copy of the Presentation during the
visit. Mr Rowland appeared to see publication of the Firm’s involvement as
“a badge of honour” with respect to the Abu Dhabi sovereign wealth fund.
50. Mr Rowland has stated that the Presentation (albeit in a different form)
was requested by the senior representative of the Abu Dhabi sovereign
wealth fund. Two copies of the Presentation were taken on the visit to Abu
Dhabi, so that it could be discussed with them. The Authority considers
that Mr Bolelyy did in fact provide a copy of the Presentation to a
representative of the Abu Dhabi sovereign wealth fund (albeit not the
senior representative who was in Brazil at the time) and that Mr Rowland
knew that he had done so.
Disciplinary sanction
51. The allegation against Mr Weller is that he knew that there was a material risk that
Mr Bolelyy’s slides would be used to market the Firm’s services. Mr Weller certainly
did not believe (or know) that there was any risk that anyone would encourage
financial crime (for profit or otherwise). As Mr Weller understood it, no-one believed
that the steps set out in the slides would be or could be carried out; this reduces
the seriousness of any breach. The allegation against him is that he contributed to
the preparation of a document which set out an unrealistic strategy which no-one
intended to implement, being reckless as to the risk that the document might be
used to market the Firm’s services. That is materially less serious than either
participating in or encouraging criminal conduct.
52. In addition, it is unfair to characterise the conduct as assisting a more junior
member of staff in committing the breach. Mr Bolelyy did not work for Mr Weller
and their relative seniority was not relevant. Mr Bolelyy was preparing the
Presentation because Mr Rowland (the boss of Mr Bolelyy and Mr Weller) had asked
him to do so. Mr Weller prepared the SFNH Document because he understood that
Mr Bolelyy was passing on a request from Mr Rowland, not to assist Mr Bolelyy in
any activity of his own.
53. Mr Weller did not intend to (and did not) benefit financially directly or indirectly and
did not seek to conceal his actions – on the contrary, he has cooperated with the
Authority throughout the investigation and has at all times acted very promptly. If
Mr Weller committed a breach at all, he did so inadvertently because he was not
aware that the discussion on 13 September 2017 was other than wholly
hypothetical.
54. In those circumstances, the breach does not justify level 4 seriousness.
55. The financial and other consequences for Mr Weller of the alleged breach are
relevant to the principles of the FCA’s penalty setting regime, as set out in DEPP
6.5.2G, namely disgorgement, discipline and deterrence. DEPP 6.5.3(4) recognises
that the factors and circumstances in DEPP 6.5A to DEPP 6.5D are not exhaustive
and, in a particular case, that there may be other factors or circumstances which
are relevant. In Mr Weller’s case there are other relevant factors and
circumstances, including his significant financial losses after he was dismissed from
his employment. It would be perverse for the Authority to ignore entirely losses
caused by the breach. Mr Weller accepts that the tone and content of the document
were not appropriate and regrets preparing the document. A proportionate
disciplinary measure must take into account the impact that the breach has already
had on the individual and Mr Weller has already been significantly impacted. This
is also relevant for deterrence: Mr Weller will not repeat his mistake. It was an
isolated incident, wholly out of character, and at odds with his usual approach to
compliance issues generally.
56. Mr Weller, as a senior manager, played a key role in the creation of the
Presentation, which contained obviously improper advice for investors or
potential investors by recommending manipulative trading strategies. He
sent it to a more junior colleague for wider circulation without having been
given any proper reason for doing so. He knew that there was a material
risk it would be disseminated for purposes that included marketing the
Firm’s services to potential investors. His behaviour was reckless.
57. The Authority considers that it is appropriate to characterise the conduct
as assisting a more junior member of staff in committing the breach –
without Mr Weller’s SFNH document, Mr Bolelyy would have been unable
to take the matter further and draft the Presentation.
58. The Authority has taken into account all relevant factors in considering the
level of seriousness of Mr Weller’s conduct. His level of personal culpability
justifies the Level 4 finding.
59. The Authority considers that the level and nature of Mr Weller’s
cooperation throughout the investigations is a mitigating factor and it is
appropriate to apply a mitigation discount. The Step 2 figure is therefore
subject to a 10% discount at Step 3 (DEPP 6.5B.3G(2)(b)).
60. The Authority has noted Mr Weller’s comments on the impact of his
dismissal from his employment and of the Authority’s investigation. The
Authority does not consider that these should be treated as mitigating
factors in this case (DEPP 6.5B.3G).
Prohibition order
61. A prohibition order is inappropriate in this case.
62. In order to make a prohibition order, the Authority must conclude that Mr Weller is
not a fit and proper person to perform functions in relation to a regulated activity.
A prohibition order does not follow automatically from a finding that a person, even
a senior manager, has breached the requirement to act with integrity5. An isolated
instance of acting inappropriately does not necessarily imply that a person lacks
integrity generally, or that he or she is likely to behave without integrity in the
future.
63. The alleged breach is that Mr Weller was reckless as to the risk that the Firm might
market its services in a particular way, not that he was reckless as to a risk that
financial crime might be committed. Mr Weller did not himself engage in any
relevant marketing, and there is no evidence that anyone did. Mr Weller has learned
his lesson, and there is no risk of him treating suggestions of improper conduct
(however outlandish) light-heartedly in the future. Mr Weller no longer works in
financial services and the isolated incident was in 2017.
64. Prohibiting Mr Weller would have a disproportionate and unwarranted effect on him
personally. It is not necessary for the protection of consumers or markets.
65. The Authority has taken into account all relevant factors to determine
whether it is satisfied that it is proportionate, in all the circumstances, to
make a prohibition order pursuant to section 56 of the Act. These factors
include that this was a single instance of acting without integrity, the
passage of time and Mr Weller no longer being involved in financial
services.
5 FCA v Tinney [2019] UKUT 227 (TCC); and FCA v Hannam [2014] UKUT 233 (TCC)
66. Having taken all the relevant factors into account, the Authority considers
that Mr Weller’s lack of integrity was sufficiently serious that he is not a
fit and proper person to perform functions in relation to a regulated
activity, and has decided that it is both proportionate and reasonable to
impose a prohibition order on him.
David Rowland’s Representations
67. The 30 August 2017 meeting was organised by Individual A, because the senior
representative of an Abu Dhabi sovereign wealth fund was due to be in London on
other business. It was an informal, unstructured meeting, with no agenda. David
Rowland attended the meeting to advance his interest in the Financial Institution,
which was a proposed partnership between the Abu Dhabi sovereign wealth fund
and David Rowland. This project was discussed in addition to personal greetings
and probably matters related to UK politics. The meeting lasted at most 20 minutes,
the Firm was not mentioned, and no mention was made of anything which could
have related to what became the contents of the Presentation. As the meeting
concluded, David Rowland went downstairs to use the cloakroom, leaving Mr
Rowland talking with the senior representative. Mr Rowland subsequently briefly
mentioned to David Rowland something about the Abu Dhabi sovereign wealth fund
“hedging their exposure”.
68. David Rowland’s attendance at the August Meeting had no significance and was not
relevant to the subsequent creation of the Presentation, nor did he have any
“behind the scenes” role in its creation. His involvement with the UAE is wholly
unrelated to the Firm. David Rowland does not think he has ever discussed the
Firm with the senior representative of the Abu Dhabi sovereign wealth fund or with
the Ruler of the UAE, whom David Rowland regards as a very close personal friend.
69. David Rowland has never attended any Board Meetings of the Firm or any
management meetings, nor has he been involved, or interfered, in any manner in
the management of the Firm. David Rowland’s attendance at the August Meeting
does not indicate that the Presentation was Bank Business, or that Bank Business
was discussed. David Rowland may have been Honorary President of the Firm, but
it meant nothing and gave him no authority in the Firm, it was a fiction. The title
was merely there to demonstrate his support for, and underwriting of, the Firm and
to give confidence to depositors.
70. David Rowland went to Abu Dhabi with Mr Rowland in late September 2017. He did
not discuss, read or look at the Presentation with Mr Rowland or anyone else during
this visit. It was inconceivable that Mr Rowland would have not mentioned the
Presentation to David Rowland, had he intended to hand over the Presentation to
promote the interests of the Rowland Family. Bank Business had no relevance to
the trip and the Firm has, and had, no relationship with the UAE.
71. The Presentation was not “disseminated”. The term dissemination is only used to
describe an act of distributing widely; this did not happen, as it was only sent to
David Rowland and Individual A, and there was no intention by either David
Rowland or Individual A to disseminate the Presentation. David Rowland was not
aware at the time he received the Presentation that he had received it by email
and did not open, read, print or forward it or give a copy to anyone else. The
Presentation was deleted from David Rowland’s computer by the automatic seven-
day deletion policy on his email system. The UAE Ambassador confirmed to David
Rowland, at the Abu Dhabi Grand Prix towards the end of November 2017, that he
had never received a copy. Accordingly, there was no meaningful “dissemination”,
and as this term is pejorative, it should not be used.
72. David Rowland was not aware of the Presentation, or its contents, until The
Intercept made contact. The telephone calls between David Rowland and Mr
Rowland on 12, 13 and 19 October 2017 do not indicate that David Rowland was
aware of the contents of the Presentation. Throughout these telephone calls David
Rowland and Mr Rowland were concerned about their communications being hacked
by agents of Qatar. The Presentation was not discussed; David Rowland’s concerns
related to a document regarding the Financial Institution and whether his phone
had been hacked. They therefore talk about what he and Mr Rowland should do
with their phones and their email addresses. The telephone calls were unguarded
conversations between father and son and do not show any attempt at a cover-up.
73. David Rowland has no idea what the references to “their office” refers to but
speculates that it could be Qatar or the office of Individual A who had also been
hacked by Qatar. The reference in the telephone calls to “badge of honour” is
nothing to do with the Presentation, nor to an economic warfare strategy. It
concerned the bad publicity resulting from being attacked by Qatar, due to David
Rowland’s friendship with and connection to the UAE. The Presentation could not
be used as a badge of honour; it was nonsense and a hugely embarrassing
document.
74. The Authority has not asserted that David Rowland was present during the
conversation between Mr Rowland and the senior representative of the
Abu Dhabi sovereign wealth fund, when the request for advice is said to
have occurred. Discussions at the August Meeting regarding the Financial
Institution did not preclude discussions on other matters which could be
taken forward as Bank Business. Such matters include the Presentation.
The Authority has not asserted that David Rowland had a “behind the
scenes” role in the creation of the Presentation.
75. Mr Rowland forwarded a copy of the Presentation to Individual A and David
Rowland using their email addresses outside the Firm. The Authority has
not asserted that David Rowland forwarded the Presentation. Having
taken into account all the relevant evidence, including that of Mr Bolelyy
and Mr Rowland, and the contents of the telephone calls on 12, 13 and 19
October 2017 between David Rowland and Mr Rowland, the Authority has
concluded that Mr Bolelyy did provide a copy of the Presentation to a
representative of the Abu Dhabi sovereign wealth fund during the trip to
Abu Dhabi. Accordingly, the Authority considers that it is appropriate to
state that the Presentation was “disseminated”.
76. The Authority refers to the fact that between April 2014 and June 2018
(which includes the Relevant Period) the Firm’s website referred to David
Rowland as its Honorary President and that, during the telephone call on
19 October 2017, David Rowland stated to Mr Rowland “don’t let’s put
anything on the Bank emails…and you can put that Vladimir [Bolelyy],
make him have one on, with Liwathon…and as soon as we can we take him
off the Bank’s payroll”. The Authority infers that, in practice, David
Rowland had a level of influence and management within the Firm.
77. In the telephone call between David Rowland and Mr Rowland on 12
October 2017, David Rowland asked Mr Rowland how he thought the
“thing in the Indian paper got there”. Mr Rowland replied “probably, I
assume – probably a leak from their office I would imagine”. Mr Rowland
then said he was aware that the content of the Presentation had been
discussed with “their” office. The Authority infers that “their office” refers
to the office of the Abu Dhabi sovereign wealth fund, which had been
provided with a copy of the Presentation during the visit. Mr Rowland also
stated to David Rowland “Never been talked to anyone else”. The
Authority infers that Mr Rowland was saying that the Presentation had not
been discussed with anyone other than the Abu Dhabi sovereign wealth
fund. Mr Rowland appeared to regard publication of the Firm’s involvement
as “a badge of honour when we go and see them next time”, and David
Rowland stated that “you can, we can capitalise on this” [with respect to
the Abu Dhabi sovereign wealth fund]. The Authority infers that at the time
of the telephone calls David Rowland is likely to have been aware that the
Presentation had been provided to the Abu Dhabi sovereign wealth fund.