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(Sharecast News) - Barclays' largest shareholder has called for chief executive Jes Staley to be removed from the board, over his ties to the late sex offender Jeffrey Epstein.
In an open letter to the board, Sherborne Investors - which controls around 5% of the blue chip bank - said the proposed re-election of Staley was "extremely ill-advised" and called on Barclays to draw a line under a "destabilising situation" which had become "a circus".
Last month, Barclays confirmed that the Financial Conduct Authority and Bank of England's Prudential Regulation Authority were investigating the relationship between Staley and Epstein, who took his own life last year while in prison awaiting trial over sex trafficking charges.
Epstein had previously served a year in prison after being found guilty in 2008 of procuring an underage girl for prostitution, and Staley has admitted he remained in contact with the disgraced financier after his conviction. Staley - who used to head up private banking at JP Morgan - told reporters last month he "deeply regrets" the relationship and that he had cut all ties to Epstein in 2015 when he took over as Barclays chief executive.
Sherborne - the vehicle of activist shareholder Edward Bramson - said it did not believe Staley was guilty of any crime.
But it referenced articles in the New York Times and Bloomberg, published last year, that stated that Staley was, along with a colleague, "principally responsible" for the banking relationship with Epstein when Staley was at JP Morgan.
"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 an executive of a financial institution," Sherborne wrote.
Referring to a probe by Barclays into the friendship, the firm said: "It seems to us that the real issue is Staley's professional conduct, not the dubious company he may have elected to keep in his private life.
"We request and strongly recommend that the bank's chairman, Nigel Higgins, and the board as a whole rescind their unanimous recommendation to re-elect Staley. We believe it would be in everyone's interest to draw a line under this destabilising situation, which has become a circus, as soon as possible."
It concluded: "Recent media coverage suggests that Staley is on a path to a graceful and protracted exit, ending in retirement which would, conveniently, remove any requirement for the board to take decisive action.
"If true, we believe that would be a mistake and would set a terrible preceded for Barclays and for UK public companies in general."
Barclays has so far not commented on the letter. However, Reuters said it was directed by the bank to earlier statements saying the board fully supported Staley.
British-born, New York-based Bramson has long been at loggerheads with Barclays, and sought election to the board himself last year. He wants the bank to shake up its corporate strategy, shrink the investment banking business and improve returns.
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