Is getting its hands slapped a strong enough message? The latest in the bad bank sagas has the British bank, Barclays, red-faced. As it should.
CEO Jes Staley has been reprimanded for attempting to discover the identity of an internal company whistleblower. Mr. Staley stated that he was trying to protect a colleague from what he considered an unfair attack.
Mr. Staley took his inquiry so far he had Barclay employees reach out to postal inspectors in his attempt to discover who had anonymously mailed two letters to the Barclays board, which complained about the bank hiring a mid-level executive.
The resulting fallout will see Mr. Staley facing a significant pay cut plus regulatory probes. The U.K. Financial Conduct Authority (FCA) has him under investigation which could result in a fine and a possible ban from the financial services industry if the FCA does not find him “fit and proper to lead the firm.”
The Department of Justice (DOJ) is also investigating whether any officials at Barclays or even the USPS may have violated civil Dodd-Frank Whistleblower protections; as well as criminal law in its attempts to uncover the whistleblower’s identity.
Mr. Staley has apologized to Barclays’ board and he states, “accepted its conclusion that my personal actions in this matter were errors on my part.” However, he’d previously told the Barclays board “that he thought it was legal to unmask a whistleblower.”
In the NY Post article, Jordan Thomas, Chair of the Whistleblower committee at Labaton Sucharow, the New York law firm responsible for the survey of 1200 plus U.S. and U.K. based financial services professionals on workplace ethics, principles, profits, leadership and confidence (re bank and bankers) asks, of the Barclays fiasco, “Under what circumstances do government agencies work for corporations?“
“Unfortunately” he points out, “you regularly see leaders within corporate America wanting to hunt down whistleblowers within their organization.” The survey’s findings pointed out a continued disregard for ethical engagement as well as alarming new tactics being attempted to silence potential whistleblowers.
In an earlier article, I’d posted New York Federal Reserve President William Dudley’s comment about ”an apparent lack of respect for law, regulation, and public trust that persists within some large financial institutions.”
Yes, absolutely there is cause for concern; the issues are ongoing. I continued that the article goes on to say that the Labaton Sucharow survey said “that one in four bankers said they knew co-workers who had run afoul of the law.” And nearly a third of those surveyed said bonus and compensation incentives encouraged malfeasance.
Profits continue to hold sway over principles no matter how many regulations or checks and balances large banks and their officials, employees and boards are accountable for. Accountable! Did I actually use that word as it regards the big banks?
As Marianne Jennings, professor emeritus of legal and ethical studies from the W.P. Carey School of Business at Arizona State says in her recent article about the Barclays situation, Barclays has been sending mixed messages for a long time.
She says, “Antony Jenkins was named Barclays’ 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.”
She points out, Mr. Jenkins did indeed try to change the culture, yet he was fired in July 2015 for not “doing enough shareholder-wise”. The message? Forget culture change, stick to earnings and profits! … “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.” Yet he was told at the time he made the request that in fact “he could not unmask the identity of whistleblowers.”
He tried anyway, admitted such and now will reap the consequences. Ironic, as she points out, that the media is lauding the board’s actions yet they fired the last CEO for trying to build a much-needed culture of accountability. Ms. Jennings says, and I agree, “This guy needs to go if the board expects to ever hear about any issue.”
We may not expect bankers to be girl and boy scouts any longer. But what’s it going to take to assure accountability? What is it about the makeup of big banks that has built a culture of profits at any cost even though this has resulted in such egregious malfeasance?
Is there any solution? If so, let me know.
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
We need a “Broken Windows” policy for the habitually criminal Money Center bankers. The Welfare Queen Banks, always sucking at the taxpayer teat when they turn insolvent, must learn that there is a Rule of Law. Now the USPS has been soiled by their association with these recalcitrant banking gangsters.