April 10, 2017 / 2:28 PM / 3 years ago

UPDATE 1-Barclays CEO Staley investigated for whistleblowing breach

(Adds detail, comments from Staley to staff, Tim Main declined to comment paras 3, 7, 13-16)

By Steve Slater

LONDON, April 10 (IFR) - Britain’s financial regulators are investigating Barclays chief executive Jes Staley and the bank over the handling of a whistleblowing incident.

Barclays said on Monday the investigation by the Financial Conduct Authority and the Prudential Regulation Authority relates to an attempt last year by Staley to identify the author of letters that were treated by Barclays as a whistleblowing incident.

Barclays said it has formally reprimanded Staley and will “very significantly” cut his bonus. But the bank said he continued to have the “unanimous confidence” of the board and it will support his reappointment at the annual shareholder meeting on May 10.

Staley, the former head of JP Morgan’s investment bank, became Barclays chief executive in December 2015.

The investigation relates to anonymous letters sent in June 2016 to members of the board and a senior executive that raised concerns about a senior employee who had been recruited by Barclays earlier that year, the bank said.

Barclays did not name the employee, but a person familiar with the matter said the letters were about Tim Main, who Staley worked with at JP Morgan. Main was hired in June 2016 as chairman of Barclays’ financial institutions group, based in New York.

Main declined to comment through a Barclays spokeswoman.

“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,” Barclays said in its statement.

After being given a copy of the first letter and made aware of the second, Staley asked the bank’s group information security (GIS) team attempt to identify the author or authors of the letters.

“Mr Staley considered that the letters were an unfair personal attack on the senior employee,” the bank said.

Staley was told it was not appropriate to try to identify the author or authors. But in July 2016 he asked if the issue had been cleared. Following this, he had an “honestly held, but mistaken, belief was that he had clearance to identify the author of one of the letters”, the bank said.

GIS asked for assistance from a US law enforcement agency in identifying the author, but it was unsuccessful and no further steps were taken to do so after that.

Staley apologised to staff in an email on Monday.

“One of our colleagues was the subject of an unfair personal attack sent via anonymous letters ... related to personal issues from many years ago, and the intent of the correspondents in airing all of this was, in my view, to maliciously smear this person,” Staley said in the memo.

“In my desire to protect our colleague, however, I got too personally involved in this matter. My hope was that if we found out who was sending these letters we could try and get them to stop the harassment of a person who did not deserve that treatment.”

He said he should have let compliance handle the matter. “This was a mistake on my part and I apologise for it.”

Main was hired from Evercore Partners, where he was senior managing director responsible for coverage of financial services clients. He previously spent more than 20 years at JP Morgan running its equity capital markets and FIG business acting as in-house adviser on the bank’s own deals.

He was one of several senior people that Barclays has hired from JP Morgan since Staley’s arrival. Seven of the British bank’s senior executives previously worked at JP Morgan.


UK regulators are also looking at Barclays’ systems and controls and culture relating to whistleblowing, the bank said.

Barclays’ board first heard of Staley’s attempt to identify the author of the letter in early 2017, after the issue was raised by an employee, Barclays said.

The board instructed law firm Simmons & Simmons to carry out an investigation and also notified the regulators.

The board said Staley made an error 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 bank said.

The board will issue a formal written reprimand to Staley and cut his variable compensation by an amount decided when the regulatory investigations conclude. The board will also look into the position of other employees involved in the incident, the bank said.

Barclays shares dipped in early trading, but were up 0.1% by midday.

The issue puts Barclays’ culture under more scrutiny after a number of scandals at the bank in recent years.

“I am personally very disappointed and apologetic that this situation has occurred, particularly as we strive to operate to the highest possible ethical standards,” Barclays chairman John McFarlane said.

Richard Boath, a senior former Barclays investment banker, last year claimed he was fired from the bank for whistle blowing.

Boath said in court he was dismissed as a “direct response” of what he told the Serious Fraud Office during an investigation into the bank over its fundraising from Gulf investors during the financial crisis. He is suing the bank at a London employment tribunal in a pay dispute and for unfair dismissal due to whistle blowing. (Reporting by Steve Slater)

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