Antony Jenkins was named Barclay’s CEO in December 2012 following the LIBOR rate-fixing problems at the bank, a serious misstep that cost the bank almost one-half billion in fines. Mr. Jenkins, by all accounts, worked diligently to change the Barclay’s culture. Then, he was fired by Barclay’s board in July 2015 because he was not doing enough shareholder-wise. So much for the culture change; we want turn-arounds and earnings. Enter James E. Staley, former JPMorgan investment bank executive, to take the Barclay’s CEO slot. Hiring from the home of the London Whale and that $6-billion trading loss, may not speak “culture is important here,” either.
In January 2016, things got sticky. The board learned through an anonymous letter that Mr. Staley had asked for some unmasking of a whistleblower. Apparently, the whistleblower Staley wanted identified by the bank’s information security team had written letters to the Barclay’s board and a senior executive raising allegations about another executive and his behavior. Mr. Staley said the allegations were untrue, and he sought to identify the author of the letter.
Now, stop here for a minute. In the world of ethics and compliance, one of the keys to anonymous reporting is anonymity. However, Mr. Staley insists that he did not know such a request was wrong. CEO training must have forgotten to mention the anonymity thing. An investigation by a law firm hired by the Barclay’s board found that Mr. Staley was told at the time his request that he could not unmask the identity of whistleblowers. Mr. Staley did it anyway, has admitted what he did, and is likely to have his bonus (or some portion thereof) clawed back.
The board has received media kudos for holding Mr. Staley to account. Pardon me? There is no way to change a culture when you fired the CEO who was trying to do so but was not making enough money followed by the retention of a CEO who is not too busy to seek the identity of whistleblowers. For what purpose we will never know. What we do know is that Barclay’s has a problem going forward. What employee is his or her right mind would make an anonymous report now? This guy needs to go if the board expects to ever hear about any issue. Mind you, Mr. Staley sought the whistleblowers identity because he felt the whistleblower was in error. Don’t we all! That’s why we have compliance officers and investigations. We sort things through to determine if the whistleblower is right or wrong.
Worse, the regulators have just gotten started on their investigation. Mr. Staley says that he has apologized to the board (“for errors on my part,” which is a weasely way of saying, “Hey, those other guys did it too!”) and vows to cooperate with regulators in their investigation. Let’s hope the regulators see the issues the board missed.