An investigation has been opened up to look into Barclays Bank’s chief executive, Jes Staley.
Staley reportedly tried to discover who wrote a whistleblowing letter to the bank.
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As a result, his conduct is being investigated by both the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Despite the scandal that has occurred, this week Staley said he still had the support of his shareholders and his board. In an interview with Bloomberg, he said:
“The full board of the bank did its review and voted unanimously to support me as CEO of Barclays. All the colour I’m getting from shareholders is quite positive. I work at the pelasure of shareholders and the board and the board has been very supportive, so let’s see.”
Last year, in June 2016, members of the Barclays board and a senior executive received anonymous letters about a senior employee who was recruited earlier that year.
The employee in question is thought to be Tim Main, someone Staley worked with previously at JP Morgan and who was serving as chairman of Barclays’ financial institutions group, in New York.
What was in the letters?
The letters raised concerns of a personal nature about the senior employee in question as well as Staley’s knowledge of issues at a previous employer, and role in dealing with the issues.
The notes are also thought to have questioned the recruitment process which led to the senior employee being hired by Barclays in this instance.
What did Staley do?
Staley asked the bank’s internal investigation team to attempt to identify the anonymous author of the notes as he perceived them to be an unfair personal attack on the senior employee.
When the team refused to do this, Staley said he had the belief that he has clearance to ask for this, and a US law enforcement agency reportedly assisted the team. The team failed to find the writer of the letters and no further steps were taken by the bank.
Why should whistleblowers be protected?
Whistleblowers are protected under UK law if they’re raising concerns over wrongdoings which are in the public interest, so something that affects other people.
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The OECD believes whistleblowing is an important part of corruption preventing in both the public and private sectors. It believes workers should be empowered to speak up so that wrongdoings can be detected and deter future violations.
What has happened since?
Barclays became aware of Staley’s response to the letters and instructed a law firm, Simmons and Simmons, to investigate it. Simmons and Simmons said the chief executive had “honestly, but mistakenly, believed that it was permissible to identify the author of the letter.”
The case was in the news again this week because Barclays board has said it will reprimand Staley and make a “significant adjustment” to his pay package. Last year, his bonus was around $1.6m and the entire amount could be docked as a result of the scandal.
Bloomberg has reported that the case is also under scrutiny by the Department of Financial Services in New York, as well as by regulators in the UK.
Other Barclays employees are under investigation for violating conduct concerning the whistleblower.
In addition, shareholders have been advised to abstain from the annual vote to re-elect Staley to the board by ISS, an influential adviser to major investors. Staley has been forced to protest that he has the backing of the shareholders and that they voted unanimously to support him in his role as chief executive.
How has Staley responded?
An email was sent to staff on Monday 10 April by Staley, apologising for what has happened. The email said:
“I realise that I should simply have let the compliance function handle this matter, as they were doing. This was a mistake on my part and I apologise for it.”
As well, a statement was issued by Barclays, in which Staley said:
“I have apologised to the Barclays Board and accepted its conclusion that my personal actions in this matter were errors on my part. I will also accept whatever sanction it deems appropriate. I will cooperate fully with the Financial Conduct Authority and the Prudential Regulatory Authority, which are now both examining this matter.”
How did the markets react?
The effect of Staley’s conduct has been felt in Barclays share price. The bank’s shares dropped around 1.2 percent in London trading, down to 241.6 pence once the scandal was announced.
How is Barclays fairing?
The bank’s shares fell almost 5.3 percent this week, the biggest drop since November, after reporting a surprise drop in fixed-income trading revenue. As well, income from equities trding also fell more than expected, while investment banking fees rose.