UT (Tax & Chancery) UT-2022-0000150 - [2024] UKUT 00254 (TCC)

Mr Tinney was the Chief Operating Officer of Barclays Wealth, reporting to Mr Kalaris. Mr Kalaris asked Mr Tinney to oversee Barclays’ overall response to the SEC Letter. Mr Tinney updated Mr Kalaris from time to time, and Mr Kalaris attended one or two meetings of the steering committee set up by Mr Tinney.

As part of Barclays’ response to the SEC Letter, it was decided that a “cultural audit” of BWA should be carried out. On 16 February 2012, Mr Kalaris met with Ms Chaly of the Federal Reserve Bank of New York (“the Fed”), Barclays’ primary regulator in the US. Mr Kalaris told Ms Chaly that he had commissioned a cultural audit which he anticipated would be completed in around a month, and said the Fed would be kept updated.

Mr Tinney hired GenVen, a consultancy run by Mr Tom Biesinger and Mr Ross Wall, to carry out a “top-down” audit by interviewing BWA’s management committee and their direct reports. He also hired Erin Hilgart LLC, a consultancy run by Ms Hilgart, to carry out a “bottom-up” audit by interviewing more junior staff.

By 28 March 2012, GenVen had completed their cultural audit and produced the GenVen Report; this was a written report of their findings, headed “Barclays Wealth America – Cultural Assessment”. The contents page sets out the headings of seven sections, of which section 2 is a summary and section 4 covers “BWA Core Cultural Issues”. It ends with an appendix headed “Detailed Themes & Anecdotal Evidence”.

The “summary” chapter sets out the overall conclusions:

“BWA was largely brought together in the crucible of the Lehmans’ collapse, subsequent acquisition by Barclays and survival instinct of the financial crisis. Whilst these factors made initial integration efforts difficult, current BWA leadership have chosen the party line of ‘we didn’t know it was that bad’.

In our opinion, the preponderance of documentary evidence and the corroborating anecdotal trends attests otherwise. The current leadership team, largely ‘Mitch’s Merrill team’ have pursued a course of ‘revenue at all costs’; taken a conscious decision to ignore support functions, reinforced a culture that is high risk and actively hostile to compliance, and ruled with an iron fist to remove any intervention from those who speak up in opposition.

The culture is fragmented, built on the carcasses of cultures that were indifferent at best to these issues, and no positive culture change has taken place under his leadership.

In its siloed state, BWA has not been influenced by positive culture from any of the other Barclays companies or regions. On this course, failure of the SEC exam was inevitable and further failures are also inevitable unless a concerted effort is made to change the broken culture at BWA and make the necessary investments.

The issue now becomes two fold; how deep do you cut and how to
quarantine the contagion?”

The section headed “BWA Core Cultural Issues” consisted of five points, each followed by an explanatory narrative and five or seven quotations from interviewees. The five points were:

At the end of that list, the Chapter says “For additional cultural factors affecting BWA see Appendix A”. That Appendix contains 15 pages, each of which has a heading, a brief summary and list of quotations from interviews. The headings were as follows;