Jessica Fino 11 May 2018 12:24pm

Barclays CEO fined over whistleblower scandal

Jes Staley, the chief executive officer at Barclays, has been fined £642,430 after failing to properly handle a whistleblowing incident in 2016

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) said Staley failed to act with “due skill, care and diligence” when he received an anonymous letter in June 2016.

After receiving the letter that contained several allegations about the bank and Staley himself, the CEO tried to identify the author and failed to seek assistant from those with expertise and responsibility for whistleblowing in Barclays.

However, the authorities did not find that Staley acted with a lack of integrity nor that he lacks the fitness and propriety to continue performing his role as CEO.

Mark Steward, FCA executive director of enforcement and market oversight, said, “Given the crucial role of the chief executive, the standard of due skill, care and diligence is more demanding than for other employees.

“Staley breached the standard of care required and expected of a chief executive in a way that risked undermining confidence in Barclays’ whistleblowing procedures.”

The FCA and PRA said, because of this case, they have concerns about the bank’s whistleblowing systems and controls, and have concluded that these require enhanced monitoring and scrutiny.

As a result, Barclays is now subject to requirements by which it must report annually to the FCA and PRA on how it handles whistleblower cases.

The bank announced on Friday that it would be cutting £500,000 from Staley’s overall remuneration package in relation to this case.

John McFarlane, chairman of Barclays, said in a statement, ‘The board is pleased that the FCA and PRA's investigations have concluded and are now behind us. The board has reiterated its support for Jes, as have shareholders at last week's annual general meeting. As a business, we remain focused on executing our strategy and delivering greater returns for shareholders."

Meanwhile, Staley said, “I have consistently acknowledged that my personal involvement in this matter was inappropriate, and I have apologised for mistakes which I made. I accept the conclusions of the Board, the FCA, and the PRA, following their respective investigations, and the sanctions which they have each applied."

The letter raised concerns of a personal nature about a senior employee recruited by Barclays in 2016, Staley's knowledge of and role in dealing with those issues at a previous employer, and the appropriateness of the Bank’s recruitment process.

Staley said at the time the accusations were an “unfair personal attack” on the senior employee and tried to identify the author.

When the board of the bank found out about Staley’s actions last year, it instructed an external law firm, Simmons & Simmons, to conduct an investigation into the matter. The board also notified the FCA and PRA and other relevant authorities.

The probe by the law firm found that Staley “honestly, but mistakenly” believed that it was permissible to identify the author of the letter.

However, the bank concluded that he made an error in becoming involved with the matter and not applying appropriate governance. The author of the letter was not identified.