Jes Staley’s bonus to be ‘very significantly cut’ after he apologised for breach of rules in what Barclays admits is a serious offence
The chief executive of Barclays is being investigated by financial regulators and faces a significant cut to his pay after admitting trying to unmask a whistleblower who made allegations about a long-term associate he had brought to the bank.
Jes Staley twice attempted to use Barclay’s internal security team to track down the authors of two anonymous letters sent to the board and a senior executive at the bank last June. On the second occasion, the security team received assistance from a US law enforcement agency, but still failed to identify the whistleblowers.
The letters are understood to have made allegations about the previous conduct of Tim Main, who worked with Staley at US bank JP Morgan and was then recruited to Barclays in a senior role last June.
Main declined to comment but, according to Barclays, 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”.
In an internal email to Barclays staff, seen by the Guardian, Staley tried to justify attempting to find the author of the letters, accusing the whistleblowers of harassment and trying to “maliciously smear” Main, who is chair of Barclays’ financial institutions group in New York.
Staley wrote: “One of our colleagues was the subject of an unfair personal attack sent via anonymous letters addressed to members of the board and a senior executive at Barclays. The allegations 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.
“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. Nevertheless, I realise that I should simply have the compliance function handle this matter, as they were doing. This was a mistake on my part and I apologise for it.”
Barclays announced in a stock market statement that Staley and the bank were under investigation by the Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) for the affair. New York’s Department of Financial Services is also looking into Staley’s behaviour.
It is extremely rare for financial regulators to investigate and censure chief executives in the City. The FCA, the main City regulator, has the power to ban individuals from working in financial services if they are not deemed to be fit and proper, as well as issuing public reprimands and fines.
Barclays said that its internal investigation led by law firm Simmons & Simmons had concluded that Staley acted “honestly but mistakenly” in trying to track down the authors of the letters. However, Barclays admitted it was a “serious” offence that would lead to its chief executive receiving a formal written reprimand and a “very significant” cut to his bonus.
John Mann, the Labour MP and member of the Treasury select committee, called on Staley to resign while the Institute of Directors said it was “clearly disappointing” that Barclays had breached its own rules on protecting whistleblowers.
Gary Greenwood, an analyst at stockbroker Shore Capital, said: “Given Barclays’ history of regulatory misdemeanours, most notably the high profile investigation into Libor rigging which led to former CEO Bob Diamond’s departure from the group, this latest revelation represents a very significant embarrassment for the board as it tries to rebuild the group’s reputation.”
Staley is a veteran US banker and took the helm at Barclays in December 2015. He pledged to overhaul its culture, which had been in the spotlight due to the bank’s involvement in rigging the Libor interest rate, for which it was ordered to pay a fine of nearly £290m.
The whistleblowing saga comes at a crucial time for Barclays. The Serious Fraud Office is close to deciding whether it will prosecute the bank and former executives about its £7.3bn Middle Eastern bailout at the height of the financial crisis in 2008. The SFO’s investigation centres on whether £2bn that Barclays lent to Qatar was then returned to the bank.
The board was alerted earlier this year to Staley’s attempts to identify the whistleblower when an employee raised concerns about the bank’s whistleblowing procedures.
John McFarlane, the chairman of Barclays, said: “I am personally very disappointed and apologetic that this situation has occurred, particularly as we strive to operate to the highest possible ethical standards. The board takes Barclays’ culture and the integrity of its controls extremely seriously.
“The board has concluded that Jes Staley, group chief executive officer, honestly, but mistakenly, believed that it was permissible to identify the author of the letter and has accepted his explanation that he was trying to protect a colleague who had experienced personal difficulties in the past from what he believed to be an unfair attack, and has accepted his apology.”
Staley said he had apologised to the Barclays board for the saga and will cooperate with the FCA and PRA probes.
Staley was paid £4.2m last year including an annual bonus of £1.4m. For this year, he was in line for an annual bonus of up to £1.88m plus another payment under the long-term incentive plan of up to £2.82m, on top of his annual fixed pay of about £2.35m.
The bank said it will decide on how much to cut Staley’s pay by when the financial regulators have concluded their investigations.
Profile: the US banker who vowed to restore Barclays’ reputation
When Jes Staley took over at Barclays, the veteran banker vowed to “strengthen trust” in the group after its reputation had been damaged by successive scandals.
The 60-year-old American was named chief executive in late 2015 following the ousting of predecessor Antony Jenkins. In an email to staff when he was appointed, he said: “The trust of our customers and clients [...] is the foundation of our success, the most valuable quality we can nurture and the key to unlocking shareholder value.”
Born in Boston, Massachusetts, James Edward Staley, nicknamed “Jes”, studied economics at Bowdoin, a liberal arts and science college in Maine.
He spent 30 years at Wall Street institution JP Morgan, enjoying a record of success that saw him promoted to chief executive of its investment banking arm in 2009. His tenure ended in 2013 after he allegedly lost patience waiting to take over from chief executive Jamie Dimon.
Staley was credited with improving JP Morgan’s attitude towards LGBT issues. This was informed by the activism of his brother Peter, who was diagnosed HIV-positive in the 1980s.
In an interview with the brothers in Fortune, Peter said he initially assumed Jes would be the “most homophobic person in the family” but found him supportive.
Staley, who has two daughters with wife, Deby, is a devoted fan of baseball team the Boston Red Sox, a keen sailor and a supporter of the Democratic party.