Barclays CEO Said to Have Told Board About Whistle-Blower Issues

  • Claim Staley flouted hiring process is false, people say
  • Staley under investigation for trying to find letter writer

The most surprising part of Jes Staley’s attempts to unmask a whistle-blower, a sequence that may cost the chief executive more than $1 million and perhaps even his job, is that he had nothing to hide, people with knowledge of the situation said.

When Barclays was interviewing Tim Main to chair its global financial institutions group, a job he started in June, Staley told the board about Main’s personal issues, said the people, who didn’t want to be identified because of the investigation. It was months later that a letter sent to board members claimed Staley had hidden the new employee’s past and breached company standards. That letter was disregarded within weeks, one person said.

The matter would have ended there if Staley hadn’t repeatedly tried to identify the sender, ignoring the advice of several senior executives. He twice ordered the firm’s Group Information Security team to find out who sent the letter. The GIS team, led by Troels Oerting, then sought assistance from a U.S. agency, Barclays said in a statement on Monday. That was the U.S. Postal Inspection Service, because the letter had a postmark from that country, the people said.

Barclays announced on Monday that U.K. regulators had opened investigations into Staley’s conduct and the bank’s controls, confirming what a person with knowledge of the matter had earlier told Bloomberg. The Financial Conduct Authority and Prudential Regulation Authority probes are at a very early stage and no Barclays personnel have yet been interviewed, one of the people said. The bank is in the process of hiring a third party to review its whistle-blowing program, the person said.

Wider Probes

The regulatory probes will be wider than the board’s own investigation and will scrutinize the actions of other individuals, including the person who gave the whistle-blower’s letter to Staley -- a breach of company policy -- one of the people said.

Barclays briefed U.S. authorities on the situation, including the U.S. Justice Department, Federal Reserve and New York’s Department of Financial Services before Monday’s statement, but none had told the bank they’d opened investigations, one of the people said. The DFS has started a probe, a person with knowledge of the case told Bloomberg before Monday’s announcement. It was the request for assistance to the U.S. Postal Inspection Service that opened the bank to possible investigations from the Justice Department and DFS, the people said.

The identity of the original whistle-blower is still unknown, Barclays said on Monday.

Spokesmen for Barclays, DFS, the Justice Department, the FCA and the PRA declined to comment.

Main, who is Princeton-educated and joined Barclays from Evercore Partners Inc., previously worked under Staley at JPMorgan Chase & Co. for more than twenty years.

Probe Outcomes

The investigation has raised questions around whether Staley can survive at the helm. Possible outcomes from the regulatory probes range from a verbal warning to being banned from working in the industry. The bank has already said it may claw back his entire 1.3 million-pound ($1.6 million) bonus for last year.

Investors have so far said they think Staley will survive the scandal, albeit with a tarnished reputation. One key will be how he responds in his interview with the FCA, one of the people said. The CEO will also have to face shareholders on May 10 at the bank’s annual general meeting in London, where he will stand for his second full-year in charge.

The internal investigation led by law firm Simmons & Simmons LLP concluded that Staley “honestly, but mistakenly” believed that it was permissible to seek the author’s identity.

Staley said he was motivated to act by an anonymous “unfair personal attack” that he thought was designed to “maliciously smear” a colleague with allegations about personal issues from years ago, he said in a memo to staff seen by Bloomberg News.

— With assistance by Greg Farrell

    Before it's here, it's on the Bloomberg Terminal.