ALEX BRUMMER: Jes Staley leaves Barclays stain

Punished: Jes Staley

Jes Staley deserves to be punished for misleading the Barclays board and the City enforcer the Financial Conduct Authority (FCA) over his relationship with sex offender Jeffrey Epstein.

As well as being hit with a £1.8m fine and banned from taking a senior role in financial services, he is forfeiting £17.8m in deferred pay on hold at the bank.

Failing to be honest with the Barclays board is bad enough. But his buddy relationship with Epstein, including visits to the latter’s luxury lair on the US Virgin Islands, shows a contemptible side to his character, which he kept under wraps as Barclays chief executive from 2015 to 2021.

Staley still appears to be denial in spite of a comprehensive email trail which emerged from the legal case brought by the US Virgin Islands against JP Morgan (and now settled). He has launched an appeal to the FCA’s upper tribunal and argues that, if he had known who Epstein ‘really was’, he wouldn’t have remained in contact.

What is difficult to understand is the lack of action by the Barclays board and, in particular, successive chairmen as a terrible scandal played out.

John McFarlane, Barclays’ ebullient chairman when Staley was chosen, felt he had snared a real star. The bank sought to sustain its role as an investment banking powerhouse and Staley, with his JP Morgan background, fitted the bill.

In his enthusiasm, McFarlane appears to have obtained only the most peremptory of references from JP Morgan’s top brass.

Had more detailed conversations and inquiries been made, red flags might have been raised. The appointment was good for Barclays, allowing it to restore its status as one of Europe’s go-to investment banks.

The financial performance was strong enough to defeat efforts by New York-based activist Ed Bramson to force Barclays out of investment banking.

Barclays’ board, first under McFarlane and, latterly, under the leadership of former Rothschild grandee Nigel Higgins, took Staley’s ‘reckless’ claims that there was no impropriety in his relationship with Epstein at face value and didn’t probe further.

Independent chairmen and non-executive directors are there to protect the interest of all stakeholders. For the board simply to send a letter to the regulator containing half-truths, without seeking outside verification, is extraordinary.

For senior appointments, one would expect boards to be cautious in the extreme and to gather all the intelligence available.

Barclays failed in this task and it is not just Staley who deserves retribution.

Voice of reason

Groupthink is easy, and being the dissident voice can cast you into outer darkness.

As chief economist at the Bank of England, Andy Haldane often found himself of the wrong side of a monetary policy committee (MPC) where former Treasury mandarins have been dominant voices.

Haldane now has a new bully pulpit, from which he can speak out, at the Royal Society of Arts. The new questioning voice on the MPC is assistant professor at the London School of Economics Swati Dhingra.

In a BBC interview she explains why, since joining the MPC in the summer of 2022, she has voted against increases in the Bank’s base rate on nine occasions.

It will come as no surprise to assiduous readers of MPC minutes why she chooses not to side with the anti-inflation zealots.

The economy already is flatlining. The 0.2 per cent bounce-back of output in August, supported by services sector strength, keeps hopes of averting a recession alive.

However, as Dhingra observes, only about ’20 per cent or 25 per cent of the impact of rate hikes’ have fed through. Monetary policy takes time to work.

Last month the Bank paused the rate at 5.25 per cent. Going further will only cause undeserved pain to mortgage borrowers, renters and the vulnerable.

China card

At last a breakthrough out of Marrakesh. China’s Exim Bank has pledged to guarantee $4.2billion (£3,4billion) of its $7billion (£5.7billion) of debt held by Sri Lanka.

Other creditors are not yet on board but Beijing’s willingness to play along should encourage the International Monetary Fund to release $334m (£274m) of assistance.

China will have calculated that, by showing flexibility, it may open the way to winning support for more voting power at the fund should new funding, by increasing IMF capital – known as quotas – be agreed.

Hope lives eternal.

This post first appeared on Dailymail.co.uk