Inside Barclays Bank, a whistleblower made an anonymous disclosure about inappropriate recruiting conducted by the CEO. In response, the bank’s CEO set out to hunt down the identity of the discloser.
The revelation of this retaliation – bringing the CEO’s action to light – itself formed another act of whistleblowing. This second disclosure was critical in showing how those in power can – and do – undermine whistleblower protection structures.
In 2018, attempts by Barclays chief executive Jes Staley to unmask against one or more whistleblowers were the subject of fines imposed by multiple financial regulators. While the whistleblowers inside Barclays remain anonymous, the importance of their actions should be recognized.
The UK regulatory ﬁne was the ﬁrst-ever such penalty for the sitting CEO of a major bank in the City of London. Ironically, Barclays had recruited Staley to try to improve its culture. In 2012 Barclays was given a £290m fine, its CEO was forced to resign and four former employees received jail sentences as part of the London Interbank Offered Rate (LIBOR) scandal.
CEO Jes Staley admitted using Barclays internal security unit in his attempts to hunt down the author of a confidential complaint about the suitability of a recruitment decision. The subject of the complaint was a friend of Staley’s, whom he had been involved in hiring. It is not clear whether the person had suitable qualifications or had undergone an appropriate competitive process for the position.
Staley specifically asked the Bank’s head of information security to discover the identity of the whistleblower. This executive then called in a US government investigative agency, the US Postal Inspection Service, to help in the bank’s own internal manhunt.
There were a number of resignations of senior staff from Barclays – but the CEO did not step down.
Retaliation against the anonymous whistleblower resulted in a £642,340 fine being issued against Staley by the UK’s Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) in May 2018. Following the year-long investigation, Barclays also cut £500,000 from Staley’s bonus.
The UK’s FCA and the PRA said the fine, equal to just 10 percent of Staley’s pay, was “appropriate and proportionate,” given his seniority and the impact of his actions. Staley, an American, remains in his position heading the bank.
Barclays itself escaped without a fine from UK financial authorities.
However, US regulators took a more hardline view than their British counterparts. In December 2018, the state of New York penalised Barclays itself with a $15 million fine for violations of governance and control rules. The US investigation concluded there were “shortcomings in governance, controls and corporate culture relating to Barclays’ whistleblowing function”.
The case represents the first real test of the FCA’s current focus on whistleblowing and their Senior Managers and Certification regime, which came into effect in March 2016. Barclays is now subject to the ﬁrst ever-requirements to tell UK regulators annually about whistleblowing cases made against senior managers, and any cases where Barclays has sought to identify anonymous whistleblowers. The bank will have to show its systems will protect those who make reports, holding those in charge personally responsible.
Respect for anonymity is a key issue for the UK’s FCA and the credibility of its whistleblowing policies. In early 2018 the regulator was censured for not respecting confidentiality when a Royal Bank of Scotland whistleblower had approached them with his concerns in 2013. The Financial Regulators Complaints Commissioner instructed the FCA to apologise for revealing the whistleblower’s identity to the very bank about which he made a disclosure of wrongdoing.
FCA Executive Director Mark Steward said, “Mr Staley breached the standard of care required and expected of a chief executive in a way that risked undermining confidence in Barclays’ whistleblowing procedures. Chief executives must act with a high degree of care and prudence at all times.
“Whistleblowers play a vital role in exposing poor practice and misconduct in the financial services sector. It is critical that individuals are able to speak up anonymously and without fear of retaliation if they want to raise concerns.”
Anonymity as a means of protection for whistleblowers has been vulnerable to compromise.
Banks in particular have used a culture of secrecy to hush-up wrongdoing and retribution by means of litigation over claims of breaches to non-disclosure agreements (NDAs). This use of NDAs to silence those with knowledge of serious wrongdoing has received significant attention in the UK with the Solicitors Regulation Authority issuing a warning to law firms that NDAs should not be used to stop individuals reporting wrongdoing.
California is among the among the first places to restrict the use of NDAs, with new laws coming into effect in 2019. They ban nondisclosure provisions in settlements involving claims of sexual assault, harassment or gender discrimination.
The Anonymous Barclays Whistleblower is given this Special Recognition Award for their bravery in stepping forward to report wrongdoing in the corporate sector, and especially for shining a light on retaliation. They did so inside a banking culture that was clearly hostile to disclosures of wrongdoing by senior staff members.
The attempted retaliation in the Barclays case – coming from the very pinnacle of the bank’s executive – reflects the reality faced by many whistleblowers. There are few protections from speaking truth about the powerful. Anonymity is one of them and must be properly protected.
The Barclays whistleblower’s case raises public interest issues particularly around potential retaliation against those who report anonymously. It also illustrates that regulators and companies must properly defend whistleblowers. The question should not be one of who made a disclosure but rather whether an independent and dispassionate review of the facts reveals wrongdoing that must be corrected.
Regulators need to send a clear message to banks that it is not acceptable to hunt down whistleblowers, nor flagrantly disregard disclosure protection processes to protect their colleagues or their own reputation. This is both an ethical question and a practical one which goes to the heart of confidence in the integrity of the financial system.