In March last year, Edward Bramson, boss of the activist investor Sherborne, called on Barclays to sack Jes Staley after news that the Financial Conduct Authority was investigating the chief executive’s ties to the convicted paedophile, the late Jeffrey Epstein.
The US activist investor argued that re-appointing Staley at the May annual meeting was ‘ill-advised’ because of the harm being done to the bank’s reputation, already reeling from Staley’s peculiar attempts at unmasking a whistleblower for which he was fined £642,000 and cost him a clawed back £500,000 bonus.
Bramson was right in his judgement. Indeed, I agreed with him, writing here at the time, that Staley’s link to Epstein was just one bizarre incident too many and that, however brilliant he may be as a banker, his presence was undermining the Barclays brand.
Exit: Barclays boss Jes Staley (pictured) has stepped down amid mounting concern over the extent of his relationship with convicted paedophile Jeffery Epstein
While Bramson’s criticism had perhaps more to do with his own attempt to force Barclays to change its business model – he has since sold his stake – he was ahead of the pack in claiming that Staley was a liability the bank could ill-afford.
It was also clear at the time that chairman Nigel Higgins needed to get a grip, and assert his authority by announcing that Staley would step down at some future date with a succession plan being put in place pronto.
But Higgins and the Barclays board ducked the issue and put their heads in the sand, hoping, no doubt, that the report would be buried. Only last month Staley himself told an interviewer that he would be around for a couple more years.
Until Friday that is. Quite what happened at Barclays’ Canary Wharf tower on Friday night when the board received the report is anyone’s guess. Clearly there was enough meat for them to sharpen their knives and demand Staley’s head.
Barclays is saying nothing, other than it is ‘disappointed’ at the outcome of the report.
Nor do we have a clue what is in the FCA’s interim report – and it maybe months before we do because Staley has said he will contest the findings, so expect some messy court cases.
However, from what can be established, the FCA’s findings have not claimed in any way that Staley saw, or knew about, Epstein’s sex trafficking crimes.
Yet the FCA’s investigators, it would seem, may have found enough buried in the cache of Staley’s emails to show that his relationship with Epstein was not as he claimed.
And that appears to be the heart of the matter. Has Staley been economical with the truth about his relations with Epstein?
Who knows. But it is being suggested there is evidence which contradicts what Staley had previously told Barclays about his role in Epstein’s affairs while acting as his private banker for many years. If that is the case, then the all elusive trust between Staley and the board has been broken, giving directors the reason to demand he quit.
The two first worked together in a ‘professional relationship’ in 2000, when Staley became head of JP Morgan’s private bank where Epstein was a client.
Then, in 2008, Epstein was charged with sex crimes and pleaded guilty to soliciting a prostitute.
By 2009, compliance officers at JP Morgan had recommended the bank cut ties with Epstein because of the unacceptable risks being done to its reputation. Yet he remained a client until 2013.
Staley, who joined Barclays in 2015, has made no secret about seeing Epstein socially for many years after his conviction.
He joined him at his New York mansion in 2011 – along with many other US bigwigs, including Microsoft’s co-founder, Bill Gates, whose own relations with Epstein are set to be disclosed in the divorce courts – and continued visiting him at his Caribbean retreat, just months before joining Barclays.
Where now for Barclays ? It’s testimony to Staley’s strategy of focusing on retail and investment banking that his successor is CS Venkatakrishnan – known as Venkat – who previously ran Barclays’ global markets trading division.
He also leaves on something of a high, with the latest results for the last nine months showing a 15 per cent rise in tangible equity on the back of the post-pandemic capital markets boom.
But the shares at 200.85p still trade at a discount to book value while shareholders haven’t done so well, earning a return of less than 3 per cent during Staley’s six years which have been so clouded by his personal issues.
Staley’s departure may be overdue but by finally asking him to leave, Barclays has hopefully made itself stronger.
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