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(Alliance News) - Activist investor Edward Bramson has once again taken aim at the Barclays PLC board, terming the bank's decision to renominate Chief Executive Jes Staley amid his ties to Jeffrey Epstein as "extremely ill-advised".
Shares in the FTSE 100-listed lender were down 3.8% in London on Monday at 143.12 pence each.
Bramson's investment vehicle Sherborne Investors said it wanted to make its position "absolutely clear" on the renomination of Staley, being the largest shareholder of Barclays following recent share purchases. Sherborne did not disclose its most recent shareholding in Barclays.
The Barclays board has previously unanimously recommended Staley for re-election at the bank's annual general meeting, having been judged to have been "sufficiently transparent" about the nature of his relationship with Jeffrey Epstein.
The Financial Times, however, has since reported the bank is preparing to launch the search for a new chief executive.
Sources told the newspaper that Staley could stand down at the company's annual meeting in May 2021.
One of the sources told FT that a probe by UK's Financial Conduct Authority into links between Staley and financier Jeffrey Epstein has injected a sense of urgency into the process to replace Staley.
US financier Epstein killed himself in a New York jail in August while awaiting trial on sex trafficking charges.
In a statement on Monday, Sherborne said: "We have read that Barclays conducted an investigation into the 'chumminess' of Staley's personal relationship with Epstein, but seemingly not into their professional banking relationship. We believe that this misses the point.
"If Staley knowingly continued providing financial services to Epstein, which could have helped to facilitate the latter's child prostitution activities, in order to reap personal career benefits, it raises the question as to whether he is suitable to be an executive of a financial institution."
Sherbore added: "It seems to us that the real issue, therefore, is Staley's professional conduct, not the dubious company he may have elected to keep in his private life."
As a result, Sherborne said it "strongly recommends" Barlcays Chair Nigel Higgins rescind the unanimous recommendation for Staley.
"We believe that it would be in everyone's interest to draw a line under this destabilising situation, which has become a circus, as soon as possible. This would allow the company to move forward and focus on more constructive activities," the investment company said.
Sherbore noted Staley "is on a path to a graceful and protracted exit ending in retirement," citing "recent media coverage", but the investment company believes this move would be a "mistake" and "set a terrible precedent".
Sherborne continued: "Any such delay would also impede the company from addressing the challenges it faces and would defer the actions necessary to be taken by the board to begin to repair the firm's culture.
"The public interest not only requires the likes of Barclays to set the highest standards, but it also dictates that there should be unvarnished transparency on major ethical questions and on the suitability of individuals that lead them."
Sherborne did, however, stress it has no reason to believe Staley was ever involved in any crime. But the investment company said his relationship with Epstein calls into his professional conduct.
"Prostitution and sex trafficking, by their very nature, involve the transfer of money and the articles allege that for much of the time in question Epstein's primary bankers included JPMorgan. The articles specifically assert that Staley, who was employed there, and another senior member of JPMorgan's management were principally responsible for the banking relationship with Epstein," Sherborne said.
The investment company continued: "We are not aware of any public denial of the essential facts in the articles concerning JPMorgan and Staley, and some of the details are, in fact, easily verifiable. It was also reported that Staley visited Epstein during his period of imprisonment and, if so, it would have been – or should have been – well known to JPMorgan. According to multiple former employees, including 'senior executives with direct knowledge of the events,' cited by the New York Times, the 'unacceptable legal and reputational risks' of maintaining accounts for Epstein were well known and had generated heated discussions 'in the bank's executive suites.'
"Sources were also cited saying that his accounts were not closed because 'he was a valuable client' and that some were under the impression that Staley was a primary advocate for continuing to keep Epstein as a client. We repeat that, to our knowledge, these reports with respect to JPMorgan and Staley have not been challenged."
Sherborne noted, that due to Epstein's crimes, it would have been "reasonable" to expect JPMorgan to shut the accounts down, or place them under more scrutiny.
"We do not know if any reports were made, but, if they were not, it raises obvious questions and, if they were, why were the accounts not closed?," Sherborne asked.
The investment firm added: "In the absence of further information, the question has to be asked: were JPMorgan and Staley willing to maintain Epstein as a client because of the profits that he brought in to the bank and the related benefits to Staley's compensation and prospects for promotion?"
By Paul McGowan; paulmcgowan@alliancenews.com
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