Barclays CEO's Penalties Over Whistleblower Saga Top $1.5 Million -- 3rd Update
May 11 2018 - 11:06AM
Dow Jones News
By Max Colchester
LONDON -- Barclays PLC Chief Executive Jes Staley has been hit
with penalties equal to roughly a quarter of his 2016 pay over his
efforts to unmask a whistleblower.
After a yearlong probe, U.K. regulators Friday fined the
American executive GBP642,430 ($868,501) for a "serious error of
judgment" in trying to identify the author of a letter that made
criticisms of a hire Barclays made, but ultimately said Mr. Staley
could keep his job.
The British bank's board also Friday docked pay worth GBP500,000
from Mr. Staley's 2016 bonus. In total that year, he earned GBP4.23
million.
"I have consistently acknowledged that my personal involvement
in this matter was inappropriate, and I have apologized for
mistakes which I made," Mr. Staley said in a statement. The New
York State Department of Financial Services is still probing the
matter.
The episode, which has proved an embarrassing distraction for
Mr. Staley, is the first test of new British rules aimed at holding
bank executives to account for their actions. In the end U.K.
regulators had to balance the risk of destabilizing Barclays by
forcing a CEO change with the need to show they take protecting the
identity of whistleblowers seriously.
Complicating matters was the fact that Mr. Staley's actions
occurred just before new U.K. rules came into force to protect not
just whistleblowers within a company but anyone who privately flags
concerns of bad behavior.
The debacle traces back to summer 2016 when Mr. Staley sought to
defend his former JP Morgan Chase & Co. colleague Tim Main from
an anonymous critic, according to people familiar with the matter.
Mr. Main had recently been brought in the as head of the financial
institutions group at Barclays.
According to the account filed by the Financial Conduct
Authority, in June 2016 a member of the Barclays board received a
letter from a person identifying themselves as "John Q. Public," a
long-term shareholder in Barclays. The letter made personal
allegations about Mr. Main. It also questioned the process for
hiring him at Barclays, the FCA said.
Mr. Staley told regulators he took issue with the allegations
and considered the letter's sender didn't count as a whistleblower
because, among other things, the person was from outside Barclays.
Mr. Staley thought the letter came from someone who had worked with
him and Mr. Main at JP Morgan.
Later that month, Barclays's office in New York received a
second letter expressing similar concerns. The letter was anonymous
but was purported to have been drafted by Barclays employees,
according to the FCA.
"This raised in Mr. Staley's mind the need to find a way to stop
this campaign by finding out who was sending the Letters, proving
that they weren't whistleblows and that their contents were false,"
the regulator said.
The FCA said Mr. Staley failed to recognize that both the
letters -- which were similar in content - could have been written
by insiders at Barclays and so whistleblowing rules needed to apply
to both incidents.
In late June, Mr. Staley asked security to identify the author
of the first letter. A day later, Mr. Staley met with Barclays's
general counsel and head of compliance and was told not to as the
senders could be considered whistleblowers. The executive called
off the search .
A month later, Mr. Staley asked his office for an update on the
matter and was again told the letters were being treated as
whistleblows. Mr. Staley and his office said they didn't recall
whether he was told this.
The day after, Mr. Staley spoke to compliance and again was told
the author of the letter couldn't be identified. Mr. Staley said he
couldn't remember the contents of the call and mistakenly
understood that compliance told him that the letter was no longer
being treated as a whistleblow. Without informing compliance, the
board or executive committee members, Mr. Staley told the security
team that he had been given clearance to find the author of the
first letter.
Mr. Staley later sent a text message to the security team asking
for an update on the attempt to identify the author of the letter.
He received a response saying the security team wanted to get video
footage of the purchase of the postage for the letter from U.S.
contacts. This proved impossible and Mr. Staley then asked if he
could contact the author of the letter another way. He was told
no.
In early 2017, Barclays's board was told of Mr. Staley's attempt
to identify the author of the letter. The board began its own probe
and told regulators.
"Given his conflict Mr. Staley should have maintained an
appropriate distance; he should not have taken steps to identify
the author," the regulators wrote in a joint statement. Barclays
now must report annually to the regulators detailing how the bank
handles whistleblowing matters.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
May 11, 2018 10:51 ET (14:51 GMT)
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