How a company treats employees who bring forth concerns is strong evidence of that company’s propensity to make legal and ethical decisions. A company that welcomes hearing about concerns and issues breeds trust with its employees and other stakeholders like investors and regulators. As a result, employees may share their concerns with an organization before taking them to the government, and the organization may be able to resolve them before the writ hits the fan. Gagging whistleblowers, no matter how it’s done, destroys trust with employees, investors and regulators.

2018 brought a great example of how not to treat employees who raise concerns.

It all started when Barclays’ CEO Jes Staley hired a colleague from another bank to take an executive position with Barclays. A Barclays’ employee sent anonymous letters to the board and to certain executives claiming that the new hire may have acted improperly or erratically in previous jobs; and, that the hiring was otherwise suspect because of Staley’s friendship with the new hire.

According to the Wall Street Journal, New York State Department of Financial services claimed that although Staley was told by both a Barclays’ compliance officer and its general counsel not to try and identify the employee who was writing the letters, Staley engaged the Barclay’s security team to track down who wrote the letters as well as the United States Postal Service. To that end, investigators evaluated the envelopes, tried to obtain video of the mailings, etc. in an effort to figure out who sent the letters.

When Staley was called out for doing this, he said that he tried to uncover the whistleblower because he felt that the letters were unfair to the new hire and he wanted to set the record straight.  

Not swayed by Staley’s reasons for his actions, Barclays cut Staley’s pay; British regulators fined him 1.1 million pounds ($1.5 million); and, New York state regulators fined Barclays $15 million.

The British Financial Conduct Authority stated the obvious about the matter:

“Mr. Staley acted unreasonably in proceeding in this way and, in doing so, risked undermining confidence in Barclays’ whistleblowing policy and the protections it afforded to whistleblowers.”

New York State authorities went further and found that others in Barclays’ leadership failed to execute on their responsibilities since they did not stop Staley’s investigation. New York State authorities also noted that the incident was a failure in governance, internal controls as well as a sign of a corporate culture that impacted the quality of Barclay’s whistleblower program.

Further, at one point media reports claimed that DOJ was investigating Barclays because Staley had contacted the U.S. Postal Service to implore it to assist in determining who sent the letters.

Barclays is now required to annually inform British regulators about any concerns raised against senior managers and whether any attempts were made to identify those who raised concerns anonymously.  

A costly and embarrassing chapter in Barclay’s history – here’s hoping that in 2019 Barclay’s leaders are more willing to hear out those who raise concerns.  

Take away: Don’t try to out your employees who anonymously raise concerns because regulators and prosecutors do not like that being done.

The intersection of law, business, criminal activity crime and ethics: why do some companies violate the law? what happens when they do? what is ethical? how do we get corporations to follow the law? can lawyers help and, if so, what is the lawyer’s role? Stay tuned, we’re going to address all of these issues and more in When the Writ Hits the Fan.
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