UT (Tax & Chancery) UT-2023-000064 - [2024] UKUT 00394 (TCC)

In his Reply Mr Staley summarised the issues in dispute between the parties as follows:

“(i)

The Authority’s decision-making process to commence a formal investigation was not conducted fairly and impartially. The Authority made its decision without giving either the Applicant or Barclays an opportunity to provide the Authority with an explanation of the circumstances in which the letter was approved. On the facts available to the Authority at the time of its decision, it would have been reasonable and proportionate to have done so. The material so far disclosed by the Authority suggests that the PRA and the Authority concluded that the letter which was sent by Barclays to the Authority on 8 October 2019 (“the letter”) was factually incorrect and misleading based on email correspondence supplied to the Authority by JP Morgan Chase (“JPM”) on 22 November 2019 and 3 December 2019, in circumstances which have not so far been disclosed to the Applicant. Any reasonable decision maker, acting in all the circumstances which the Authority was presented with, would have offered the Applicant and Barclays the opportunity to provide an initial explanation of any apparent inconsistency between the email correspondence and the terms in which the letter was expressed. The Authority failed to provide the Applicant with any opportunity to clarify the circumstances in which the letter had been approved, prior to the decision to formally commence the investigation. Instead, the PRA and the Authority prejudged the issue of the Applicant’s culpability and then directed that an investigation should be commenced. Their process was unfair and disproportionate.

(ii)

Once the facts had been established by the appointed Investigators and the investigation concluded, the Authority’s decision could not have reasonably resulted in the conclusion that the Applicant had been responsible for material misconduct. The Authority’s decision to issue the Notice that is the subject of the Reference was grossly disproportionate and paid no proper regard to the evidence relating to the circumstances in which the Applicant approved the draft of the letter.

(iii)

The Applicant is not proved to have acted recklessly in approving the draft of the letter of 8 October 2019 and / or in failing to take steps to correct what are alleged to be factual inaccuracies in its content. He is not proved to have acted in contravention of any of the Conduct Rules.”

At [3.26] of the Reply it was stated:

“(i)

….[ Named] senior executives and board members knew the history of the relationship and they had been informed by the Applicant on a number of occasions that the Applicant had had a professional, fairly close relationship with Mr Epstein and that he had had no contact with Mr Epstein since joining Barclays in December 2015. It follows that it is irrational for the Authority to assert that the Applicant was aware of a risk that the letter might mislead the Authority.

(ii)

An issue which the Authority should have addressed, but has not, is why the letter was drafted in these terms when Mr Hoyt, who was responsible for the drafting, and Mr Higgins, who was responsible for approving the draft and sending this information to the Authority, were both aware that the Applicant had consistently informed Barclays first, that he had had a professional, fairly close relationship with Mr Epstein and second, that he had had no contact with Mr Epstein since joining Barclays. The Applicant’s case is that the answer to that question lies in the nature of the enquiry made by the Authority on 15 August and the perception that Mr Hoyt and Mr Higgins had and shared in relation to its scope and purpose, namely that its limited purpose was to assure the Authority that the Applicant had neither been aware of nor involved in Mr Epstein’s unlawful activities. That was the reputational issue for the Bank and the Authority, and was answered by the letter, as the last paragraph thereof demonstrated. It reads as follows:

“In sum, neither our discussions with Jes nor our review of the bank’s records have revealed any cause to suspect that Barclays or Jes have played any role in the activities of Mr Epstein that have been under investigation.”

At [3.28] of the Reply it was stated:

“It would be incorrect to characterise the Applicant’s interactions with Mr Epstein over a period of 15 years, as the Authority has done, as that of “a personal friendship, albeit predicated on a business connection”. The evidence for such a proposition does not exist and it would be unreasonable to characterise the relationship in such terms. The relationship existed for reasons which were of benefit to the Applicant and the organisations by which he was employed over the period from 1999 to 2015. Personal interaction extended to occasional dining invitations to Mr Epstein’s home in New York and on other isolated occasions at other venues, at which many well connected persons were often present. The purpose of the Applicant’s interaction with Mr Epstein over the period in question was for business. Many business relationships of mutual value include social contact, such as hospitality events, summer parties and religious celebrations. Longstanding commercial relationships are not built upon a complete absence of social contact. The “closeness” of any such relationship cannot be judged by the nature of the social activity engaged in, in the absence of regular interaction in the course of personal and social lives. No relationship whatsoever existed when the Applicant joined Barclays and, by the time the Authority’s investigation commenced, the last contact between the Applicant and Mr Epstein had taken place more than four years prior.”

At [4.5] and [4.6] of the Reply it was stated:

“4.5

Mr Staley’s consistent instructions to Barclays, provided by him to its senior executives and two board members, were that his relationship with Mr Epstein had been at times “professionally fairly close” and that the last occasion he had met with Mr Epstein was in April 2015 when he and his wife had visited Mr Epstein on his island, for no more than two or three hours while they were sailing in the Caribbean, and that he had had no contact with Mr Epstein since his appointment as CEO of Barclays in December 2015. This information was accurate and by 15 August 2019 was already in the public domain.

4.6

Those senior executives and board members at Barclays who were engaged in preparing the response to the Bowdoin College and the Authority’s enquiry therefore knew that Mr Staley’s relationship with Mr Epstein had been described by him as “professionally fairly close”, that it had not been one of personal friendship and that Mr Staley’s last meeting with Mr Epstein had been in April 2015 when he had visited Mr Epstein’s island in the company of his wife while sailing in the US Virgin Islands. They were also aware that Mr Staley’s repeated position was that he had had no contact with Mr Epstein since joining Barclays on 1 December 2015.”