The bank’s board and U.K. authorities are investigating why Jes Staley went on a hunt for the identity of an author of a whistleblowing letter.
Jes Staley, Group Chief Executive, Barclays
U.K. regulatory authorities are investigating why James E. “Jes” Staley, group CEO of Barclays, was hunting for the identity of a whistleblower, and Barclays officials say they are making “a very significant compensation adjustment” to Staley’s salary.
For now, Staley still has the backing of the Barclays board and will be reappointed this coming May.
In 2015, Barclays officials named industry veteran Staley to be its top executive, signaling the start of a new era for a firm badly shaken by legal battles with government authorities and regulators, sudden executive shuffles, and major layoffs. Staley assumed his role and joined the boards of Barclays PLC and Barclays Bank PLC as a director on December 1, 2015.
Earlier this week, bank officials acknowledged that the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are investigating Staley’s “individual conduct and senior manager responsibilities” in response to a whistleblowing program of Barclays “and an attempt by Mr. Staley in 2016 to identify the author of a letter that was treated by Barclays Bank PLC as a whistleblow.”
Staley’s attempt “to identify the author of the letter … first came to the attention of the Barclays Board in early 2017 as a result of a concern raised by an employee regarding amongst other matters the adequacy of Barclays whistleblowing procedures,” according to a press release from the bank.
The board subsequently retained a law firm, Simmons & Simmons LLP, to conduct a focused investigation into the matter. Sir Gerry Grimstone, the deputy chairman and senior independent director, conducted an investigation on behalf of the board.
“The board also promptly notified the FCA and PRA and other relevant authorities,” officials say.
The principal findings by Simmons & Simmons are:
- In June 2016, board members received “an anonymous letter and a senior executive received another anonymous letter raising concerns about a senior employee who had been recruited by Barclays earlier that year. Amongst other issues, the letters raised concerns of a personal nature about the senior employee, Mr. Staley’s knowledge of and role in dealing with those issues at a previous employer, and the appropriateness of the recruitment process followed on this occasion by Barclays;”
- Both letters were sent to the Group Compliance function “as whistleblows and investigated by them;”
- “Having been given a copy of the first letter and made aware of the second, Mr. Staley initially requested that the Group Information Security (GIS) team attempt to identify the authors of the letters. Mr. Staley considered that the letters were an unfair personal attack on the senior employee;”
- Staley was told “that it was not appropriate to take steps to identify the authors. Following this, neither Mr. Staley nor the GIS team took any such further action.
- In July 2016, Staley asked if “the whistleblowing issue with the letters had been cleared. Following this, Mr. Staley’s honestly held, but mistaken, belief was that he had clearance to identify the author of one of the letters;”
Still mistaken, Staley requested that “GIS attempt to identify the author of the first letter following which GIS contacted and received assistance from a U.S. law enforcement agency in identifying its author,” according to bank officials. “Mr. Staley was subsequently informed of this and the results from the steps that GIS had taken. However, ultimately this attempt by GIS was unsuccessful in identifying the author and no further steps were taken to do so after that.”
Despite Staley’s misunderstanding of the situation, the Barclays board concluded that he erred “in becoming involved with, and not applying appropriate governance around, the matter, and in taking action to attempt to identify the author of the letter. The author of the letter was not identified and no further action was taken.”
Staley has apologized to the board for his error, bank officials say.
“The Board believes that its response to the matter should be proportionate to its serious nature. It will therefore be issuing a formal written reprimand to Mr. Staley and has decided that a very significant compensation adjustment will be made to Mr. Staley’s variable compensation award,” bank officials say. “The Board will give consideration to the findings of the FCA and PRA investigations and the precise amount of the compensation adjustment will be determined by the board once those investigations have concluded.”
Staley and other Barclays officials will cooperate “fully with the FCA and PRA investigations,” according to the bank. The board also wants independent reviews of Barclays relevant processes and controls, including the whistleblowing program. “The Board continues to review the position of other employees involved in this matter,” officials add.
“I am personally very disappointed and apologetic that this situation has occurred, particularly as we strive to operate to the highest possible ethical standards,” says John McFarlane, chairman of Barclays in a statement. “The board takes Barclays culture and the integrity of its controls extremely seriously. … Taking into account both the circumstances of this matter and his otherwise exemplary record since joining Barclays, including contributing significantly to improvements in Barclays culture and controls, Jes continues to have the Board’s unanimous confidence and it will support his re-appointment at Barclays Annual General Meeting on 10 May 2017.”
In a prepared statement, Staley says that apologized to the Barclays board, and accepted its findings. “I will also accept whatever sanction it deems appropriate. … Our whistleblowing process is one of the most important means by which we protect our culture and values at Barclays and I certainly want to ensure that all colleagues, and others who may utilize it, understand the criticality which I attach to it,” Staley says.
Barclays officials decline further comment but say that they will provide future updates on the situation.
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