Jes Staley had had enough. He told Barclays chair Nigel Higgins he was considering resigning from his role as chief executive of the British lender.
It was December 2019. Staley had learnt that the UK financial regulator, which had received a trove of emails from his former employer JPMorgan Chase, would launch an investigation into whether he had misled Barclays and the Financial Conduct Authority about his relationship with convicted paedophile Jeffrey Epstein, who had died by suicide in a prison cell four months earlier.
“I can’t go through this again,” Staley told a colleague, according to people with knowledge of the conversation. The American investment banker brought in to revive Barclays’ fortunes in 2015, had already had a run-in with the watchdog in 2018. The prospect of another FCA probe seemed too much but he resolved to see it through.
That decision set off a chain of events that have culminated in a high-stakes legal battle set to begin in London on Monday. Staley will seek to clear his name and overturn a 2023 ban imposed by the FCA that prohibits him from holding senior positions in financial services. The episode cost him his job anyway; it was the first time the watchdog banned a CEO of a major British bank for actions taken on his watch.
In challenging the ban and fine, Staley will draw some of the City of London’s most powerful individuals, as well as his former colleagues, back to a case they have long been eager to leave behind. Bank of England governor Andrew Bailey, Sam Woods, head of the Prudential Regulation Authority, and Higgins will all give evidence, as will Staley himself.
The case will inevitably generate headlines. The UK’s Prince Andrew, prolific fraudster Bernard Madoff, former US treasury secretary Lawrence Summers and Lord Peter Mandelson, the UK’s new ambassador to the US, are all referenced in the court filings; an indication of the nexus of power and high society that Epstein exploited.
Interest in Epstein, meanwhile, has been revived by a promise by the US Department of Justice to release declassified information this week pertaining to the dead financier.
The court case in London will dredge up details of Staley’s ties with one of the most notorious sexual predators in recent memory, prompting friends and former colleagues to ask why Staley would bring it.
“[Staley] has a family, a nice house in the Hamptons, a yacht and more money than god,” said one former Barclays colleague who was close to the banker. “Let it go.”
Some of Staley’s former associates have speculated that this is revenge for the way he was treated by UK regulators, who separately fined him in 2018 over his attempts to unmask an anonymous whistleblower.
“He is going to try and embarrass some of the people who were involved at the time and will try to put a bit of muck on everyone,” said a former Barclays board member. “But if he called me and asked what I thought, I would definitely advise him to drop it.”
Staley could still do that before Monday. But as things stand, he is out to make a point — even if it comes at great personal and financial cost. He has enlisted the help of Lord David Pannick KC, one of the UK’s most experienced and expensive barristers, whose clients have included Queen Elizabeth II and the Kingdom of Saudi Arabia.
A lawyer for Staley declined to comment.
Two key questions lie at the heart of the case: whether Staley intentionally misled Barclays — and thereby regulators — about his relationship with Epstein; and whether communications between the two continued after he became Barclays CEO in December 2015.
Staley, who left Barclays in November 2021 after the FCA provisionally found he had acted “recklessly and with a lack of integrity,” will seek to prove that his fate was sealed long before the regulator came to its conclusion. He argues in court filings that minds were already made up by the time of a crucial meeting during that fateful December of 2019 between Bailey, who was then FCA head, Woods, Higgins and Mark Carney, then BoE governor and now a contender to be Canada’s next prime minister.
That is when the four men discussed a letter Higgins had sent to the FCA in which he wrote that Staley had confirmed to the bank “he did not have a close relationship” with Epstein, and that they last communicated “well before he joined Barclays in 2015”.
The regulators, who were in possession of a cache of emails they believed showed otherwise, said they had been misled and would launch an investigation; the news of which prompted Staley to offer his resignation over Christmas 2019.
Higgins, in his debrief to Barclays’ board, said he had been left with the impression that three of the UK’s most powerful financial regulators felt Staley’s position was untenable, according to people with knowledge of the briefing.
Staley is convinced the FCA “got him fired and disgraced without the evidence to back that” so the issue is “very personal for him,” said a former director on the Barclays board.
The FCA’s case against Staley is summarised by its assertion in a pre-trial filing that he “could and should have avoided the inclusion of the misleading statements” in the letter the bank sent to the regulator.
“Staley had the opportunity to correct these misleading statements in the letter, but failed to do so,” the FCA said.
The FCA is relying on over 1,000 emails exchanged between the two men over eight years up until October 2015, in which Staley refers to Epstein as “family” and “one of our deepest friends,” as proof that the pair were close.
There are also exchanges where Staley plans visits to the late financier’s private island and now infamous emails between the two men referring to Disney characters.
“That was fun. Say hi to Snow White,” Staley wrote in an email to Epstein in July 2010, to which he received a response saying “[W]hat character would you like next?”
“Beauty and the Beast,” Staley replied.
There are also emails related to professional matters, most notably Epstein’s attempts to install Staley as Barclays chief executive in 2012 by leveraging his relationship with Mandelson.
But Barclays did not want to have another pugnacious American investment banker in the job so soon after Bob Diamond’s defenestration by the Bank of England over the Libor fixing scandal; an episode indicative of the fractious relationship the bank has long had with the British establishment and regulators.
Staley has argued that “the overwhelming majority” of his correspondence with Epstein was for business purposes and that he was not “unique in utilising his connection with Epstein to further the flow of information which was of value to his employers.”
The 68-year-old will also juxtapose the seriousness of his punishment — a disgraceful end to a 40-year career in finance — with the allegedly vague request from the FCA that Barclays write down how it had “satisfied themselves that there was no impropriety in the relationship”.
Bob Hoyt, Barclays’ group general counsel at the time was responsible for drafting the letter. Staley claims he questioned the letter’s characterisation of his relationship with Epstein as “not close” to Hoyt.
Staley will also have to answer allegations that he remained in contact with Epstein after he became Barclays CEO through an intermediary: his daughter Alexa Staley.
Epstein sent emails to Staley’s daughter for almost a year starting in March 2016.
In one, sent shortly after Donald Trump won the US election in 2016, Epstein asks Staley’s daughter whether he would want to be US treasury secretary. She says she has asked her father and that he said “not yet, but thanks”.
Staley has said he does not remember talking to his daughter about her exchanges with Epstein, citing the “passage of time” and “his professional commitments”.
The FCA, Bank of England, Higgins and Barclays declined to comment.
Much of this dirty laundry has already been aired through litigation involving JPMorgan in the US, where Staley worked until 2013. The bank took on Epstein as a client of its private bank in 2000. It kept him on after his indictment in Florida on charges of soliciting minors in 2008.
JPMorgan has settled two lawsuits over its dealings with Epstein, including one against Staley, but denied any responsibility for his crimes.
But those who know Staley say his willingness to fight the FCA is misguided, regardless of the merits of his case.
“You can contest it, you can fight it but all this is still going to be out there,” said one person who knew Staley. “Even if you win, at the end of the day, you’re not going to get another job and no one is going to change their minds.”
