Barclays CEO Twice Sought to Uncover Whistle-Blower in 2016By and
Effort may have violated whistle-blower protection rules
U.K. added new regulations on whistle-blowing last year
Barclays Plc’s mishandling of anonymous letters that raised allegations against a senior employee came as U.K. regulators were strengthening whistle-blowing protections.
In June 2016, members of Barclays’ board of directors and a senior executive at the bank each received letters outlining what the senders described as concerns “of a personal nature” about a high-ranking employee, the bank said in an April 10 statement. The authors of the letters also flagged that Chief Executive Officer Jes Staley knew about the issues and had played a role in dealing with it when he and the person in question were both employed elsewhere, Barclays said.
The person is Tim Main, who was hired in June as chairman of the bank’s global financial institutions group, according to a person familiar with the matter. Staley and Main previously worked together at JPMorgan Chase & Co.
Those letters, which also raised concerns about the “appropriateness” of Barclays’ recruitment process, were registered as whistle-blower complaints by the bank’s compliance department, the bank said.
Given a Copy
When Staley was given a copy of the letter sent to the board and learned of the other, he asked the bank’s security team to try and find out who wrote them. Staley considered the letters to be an “unfair personal attack” on the employee, according to Barclays. Staley was told it was inappropriate for him to try to identify the authors, the bank said.
In July, Staley asked if the whistle-blowing allegations had been dismissed and came to believe he had a right to find the identity of the authors, the bank said. He again asked bank security to identify the author of the first letter. In the course of doing so, security staff reached out to a U.S. law enforcement agency, Barclays said, declining to name which one.
The U.S. agency did provide some assistance to Barclays, and Staley was apprised of the situation, the bank said without going into specifics.
Even with the help, Barclays said it wasn’t able to identify the author of the first letter and said no further efforts were made to unmask the person.
In the wake of the Libor rate rigging case and a payment protection insurance scandal, the U.K.’s Parliamentary Commission on Banking Standards recommended in 2013 that new regulations be adopted to encourage bank employees to report wrongdoing to the authorities.
The Financial Conduct Authority held a consultation in 2015 and implemented new rules in September 2016 requiring financial institutions to establish robust procedures for protecting employees who report potential wrongdoing. These measures include appointing a senior manager to act as a "whistle-blower champion," installing protocols for handling an array of disclosures, and producing an annual report for the board on the effectiveness of the program.
Barclays overhauled its whistle-blower system around 2015 and made a push to publicize it internally, a person familiar with the program said.
It’s up to the banks themselves to decide how they protect the confidentiality of whistle-blowers, said Arpita Dutt, a partner who specializes in such cases at BDBF LLP, a London law firm. Barclays assures employees that it will "make every reasonable effort to hold your name in confidence," according to its policies published on its website.
"It’s quite alarming that the person at the top of the bank doesn’t know what his own policy says and how important it is to preserve the confidentiality for whistle-blowers," Dutt said. "That could reverberate across the bank and dissuade potential whistle-blowers from coming forward."
The bank’s board first learned of Staley’s attempts to identify the authors early this year, when an employee raised concerns about the adequacy of the bank’s whistle-blowing procedures. Barclays hired the law firm of Simmons & Simmons to probe the issue and informed the Financial Conduct Authority and Prudential Regulation Authority.
The FCA is investigating both Staley’s individual conduct and the bank’s responsibilities and controls in connection with whistle-blowing, the Barclays said in a statement. The case is also under scrutiny by the Department of Financial Services in New York, a person familiar with the matter said.
The FCA, which has wide reaching investigative powers, will probably examine whether Staley breached its conduct rules, said Josephine Van Lierop, a senior associate at Slater and Gordon LLP.
A spokesman for the FCA declined to comment.
Barclays said in the April 10 statement that Staley’s belief he had a right to know the name was “mistaken,” reprimanded him and cut his compensation by an undisclosed but “very significant” amount. Nevertheless, the board said it retained its “unanimous confidence” in the American to be reappointed as CEO at the upcoming annual meeting on May 10.
— With assistance by Stephen Morris, and Gavin Finch