UT (Tax & Chancery) UT-2023-000064 - [2025] UKUT 00203 (TCC)

Mr Davidson’s evidence was that:

Mr Higgins’s recollection differs from that of Mr Davidson. In his cross-examination he confirmed what he had said about the call in his interview with the Authority in December 2019.

Mr Higgins said that Mr Davidson told him that he had been talking to Mr Bailey and they wanted to know if the Board of Barclays had satisfied itself about the relationship between the two men given the stories that were coming out. Mr Higgins replied by explaining to Mr Davidson that Mr Staley had already come to him to give an explanation of the relationship. We assume that this is the conversation referred to having taken place in July 2019, as described at [277] above. Bearing in mind this was a short call, Mr Higgins confirmed that he would not have gone into any level of detail about the relationship between the two men. However, it was clear that the tenor of what Mr Higgins told Mr Davidson was that as a result of the discussion with Mr Staley, there was no concern on his part as to any impropriety in the relationship.

We consider that it is likely that in giving this confirmation to Mr Davidson, that Mr Higgins had in mind the answer to the question that he had asked Mr Staley in July 2019, as recorded at [279] above, that is whether Mr Staley had witnessed any of the matters alleged against Mr Epstein. Because at that time, it would appear that Mr Higgins had not had a detailed account of the extent of the relationship with Mr Staley, it is likely that his impression that there had been no impropriety in the relationship was based solely on what had been discussed with Mr Staley in July and therefore it stuck in Mr Higgins’s mind that that was the issue that would be of most concern to the Authority when Mr Davidson made the enquiry in the way that he did.

That position is corroborated by what Mr Higgins told Mr Bailey in the call that took place between them on 15 December 2019, after the Authority’s investigation had commenced. Mr Bailey’s evidence, in commenting in cross-examination about a note Mr Higgins had made of the call in which he recorded that the investigation “was about the girls”, was that Mr Higgins had put to the Authority that the question that would have been asked back in August was about “the girls”. Mr Bailey had responded by saying that was not the case, the matter being all about the text of the Letter.

That position is supported by further statements that Mr Higgins made in his interview in January 2021. He said at that time that what he understood by the enquiry and relayed to Mr Staley was: “The question that was put to Jes is the same one that I keep repeating, namely that the FCA was interested to be sure that I was comfortable about the relationship between the two men, which I took to mean is there any way that he could or should have been aware of what was going on with these girls.” When asked in his re-examination “So to what extent were you seeking to establish the level of distance in the relationship so as to be satisfied that Mr Staley could not or should not have known of Mr Epstein’s wrongdoing?”, Mr Higgins confirmed in his evidence that “We were trying to assess in the round whether what we were told made it plausible or implausible that Mr Staley was then aware of or, worse, involved in what was going on.”

We agree with the Authority’s submission that this indicates that Mr Higgins was aware that even if the Authority’s enquiry was limited to ascertaining whether Mr Staley was aware or should have been aware of Mr Epstein’s misconduct, then it was necessary for Barclays to understand the extent of the relationship between the two men. In other words, to be able to answer that question it would be necessary to understand in further detail the nature of that relationship than had previously been disclosed by Mr Staley to Mr Higgins.

As to how the conversation concluded, Mr Davidson’s evidence was that at the conclusion of this first phone call he requested that Mr Higgins put in writing the conversation they had had and that he expected that to cover the steps Barclays had taken to allow it to understand there was no particular or close relationship. He said:

“I had said to him at the conclusion of this conversation -- he had asked me and I distinctly remember this, "Is there anything further you need from me?” So Mr Higgins at this first discussion felt that he had provided all the information necessary to answer my query about what steps they had already taken, and that I was satisfied with those steps. And when he called me it is no surprise to me that the question of close relationship came up, because I had requested at the conclusion of this first telephone call, when he asked me, "Is there anything further you want from me?", as in, "Am I free to go?", if you like, "Have you got what you need?", was, "Yes, but please could you put that in writing", which was -- and that in writing was the steps that they had taken to become comfortable; in other words, to summarise the conversation that we had. And I expected it to include what I had been taken to understand, that there was not a particular or close relationship.”

Mr Higgins’s evidence in his interview in January2021, which he confirmed in his cross-examination, was that he had had a question put to him over the phone “in a somewhat informal manner” and he had undertaken to come back in a form and a level of detail that was not specified by the Authority without any monumental urgency on a topic which Barclays did not feel uncomfortable about. Mr Higgins emphasised that although the request had been put in an informal manner, he understood the seriousness of the question and that it required a serious and proper response.

A note of the conversation does exist. It was created by Ms Collins-Firth on Mr Davidson’s instructions on 16 August 2019, the day after the call. The text of the note reads:

“JD spoke to NH who is currently away on holiday and back in the office next week. NH advised that when the press comments had first emerged JS came to speak with him and stated that there wasn’t any particular relationship between him and JE. NH advised he felt satisfied by that. JD advised that the FCA’s perception is that media reports had intensified around their relationship and asked NH to consider these. JD further asked NH to write to the FCA setting out how they had satisfied themselves there was no impropriety to the relationship.”

This note is clearly inadequate, as Mr Davidson accepted. It did not meet the standards prescribed by the Authority for what is described as a “Note for the Record”. Mr Davidson explained that a Note for the Record allows information to be shared amongst people inside the Authority and to record and be able to understand later what happened in a meeting. It is clear that the note dictated by Mr Davidson does not meet that standard. For example, the note does not specify the level of detail that Mr Davidson expected the written response to cover. It simply asks how Barclays had satisfied themselves that there was no “impropriety to the relationship”. The note does not indicate that the Authority was interested in whether or not Mr Staley and Mr Epstein had a close relationship and if so, the nature of that relationship, which Mr Davidson said in his evidence was implicit in his enquiry.

Mr Higgins, rightly, took issue with the statement in the note that there was “no particular relationship” between Mr Staley and Mr Epstein. It clearly lacks clarity and, if it means anything, can be interpreted as indicating that there was hardly any relationship at all between the two men.

Mr Higgins’s response when cross-examined on the statement was: “I didn’t say that. I don’t know how I could have said that because there was and we knew it.” We accept Mr Higgins’s evidence on this point. Although detailed discussion with Mr Staley on the relationship had not taken place at this point, it was clear to Mr Higgins that there was at the very least a banker/client relationship and that there had been meetings between the two men outside a business context, for example to see Mr Epstein while he was on work release from prison and a visit to Mr Epstein’s island.

There is no evidence, however, that at this stage Mr Davidson had asked Mr Higgins specifically whether the relationship was a close one. Bearing in mind Mr Higgins’s perception was that the Authority was after confirmation that Mr Staley was not aware, or should have been aware, of Mr Epstein’s criminal misconduct we think it is more likely that during the call Mr Higgins told Mr Davidson that there were no concerns from Barclays point of view in relation to that issue, without using the phrase “there was no close relationship”. If Mr Higgins said that, we see no reason why Mr Davidson would not have ensured that it was included in the note of the call.

Mr Davidson sought to defend the lack of a Note for the Record on the basis that the onus was on Barclays to articulate the steps it had taken to satisfy the enquiry and in doing so there would be a record from the Chairman of Barclays himself.

We do not accept that a response from Barclays would be an adequate substitute for a proper note, particularly because, as Mr Higgins’s evidence demonstrates, it was not clear to him what level of detail was expected in the response. It seems extraordinary that the Authority could consider that a letter from a regulated firm, however carefully drafted, would be an adequate substitute for a proper note prepared by the Authority itself.

We should point out that we do not criticise Mr Davidson for having started the enquiry with a telephone call. However, as Mr Higgins said, the enquiry was started in an informal manner and we consider that it would have been appropriate for the Authority to follow up with written confirmation of what they were expecting. For instance, had it been done simply by providing a copy of the note prepared by Ms Collins-Firth that would have given Mr Higgins the opportunity of indicating that the note did not reflect his understanding of the situation.

The Authority seeks to defend the lack of a written follow-up on the basis that this was a highly sensitive matter and the less there was in writing the less likely that there would be a leak. However, the Authority must be used to dealing with highly sensitive information and have appropriate systems in place to ensure that the information is kept behind a firewall. In any event, the Authority was expecting a written response from Barclays which, according to Mr Davidson’s evidence, would set out the position for the record. This was a unique situation; a very serious concern about the fitness and propriety of the chief executive of one of the world’s most important financial institutions and there should have been no doubt as to what was expected of Barclays and their response. The fact that we have this dispute in the Tribunal as to what was expected indicates that the approach of the Authority was deficient in this regard.

Nevertheless, despite there being a difference between Mr Higgins and Mr Davidson as to the scope of the enquiry, it appears that those who did become involved in preparing the response to the Authority, including Mr Higgins himself, appreciated that what was necessary in order to give the Authority the comfort that it was seeking was to delve into the relationship between Mr Staley and Mr Epstein in further detail.

On 27 August 2019, a call took place between Mr Higgins and Mr Hoyt. Mr Higgins relayed Mr Davidson’s request to Mr Hoyt. Mr Hoyt said that his understanding was that Mr Davidson had asked if the board had examined Mr Staley’s connection with Mr Epstein and that Mr Higgins told him what he knew about the connection, that he had spoken to Mr Staley about it, had talked to him about the history and that Mr Davidson had requested some sort of a note or a letter coming back confirming that the board or Mr Higgins had done whatever they needed to do to satisfy themselves that they were aware of the facts.

In his evidence Mr Hoyt said:

This recollection is corroborated by a note Mr Hoyt made of that call on his iPad which records:

“Jonathan Davidson rang to ask if bd [board] had examined CEOs connection to Epstein. Told him that JS raised with him; discussed history; could we have a note or letter setting out the issues.

– Have Matt sit with Jes and get history; reduce note to Crawford.”

We take from this evidence that Mr Davidson was expecting Barclays’ response to confirm the nature of the connection between Mr Staley and Mr Epstein and that this was a broader issue than simply providing confirmation that Mr Staley was not aware, or should not have been aware of Mr Epstein’s criminal misconduct. We also find from this evidence that both Mr Higgins and Mr Hoyt were aware of that.

In his first witness statement, Mr Hoyt noted that when he started drafting the letter he was not entirely sure what the Authority wanted. He clarified during cross-examination that:

“we knew generally that he wanted something to be done such that Mr Higgins could affirm that Barclays had appropriately looked into the matter and were satisfied but how that was to be articulated, what was to be provided to the FCA was not clear and you could imagine, and we’ve seen in these documents, a number of ways in which that could be done.”

We accept, as the Authority submitted, that this evidence demonstrates that whilst Mr Hoyt’s task was to produce a draft response to the Authority which confirmed that Barclays had looked into the matter and were satisfied as to the nature of the relationship between Mr Staley and Mr Epstein, that required Mr Staley to work with Mr Hoyt and others to provide a full account of the relationship. The only live subject of discussion was the form that the response would take and not how the Authority’s enquiry was to be answered.

Further support for the Authority’s position that the scope of the enquiry was broader than that contended for by Mr Staley is to be found in an email exchange that Mr Higgins had with Mr Hoyt on 5 October 2019 when discussing the draft of the Letter.

Mr Higgins suggested to Mr Hoyt that the last paragraph be removed from the draft Letter with the rationale being:

“If we want to shorten — do we need last para? I only mention because I’m not sure that this is quite the FCA’s point; I think they are probably more worried about judgement than involvement in wrong-doing.”

The last paragraph which Mr Higgins suggested be removed read:

“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 are under investigation.”

Mr Higgins explained in his first witness statement that his reference to the Authority being “more worried about judgement than wrongdoing” expressed the following concern with the draft last paragraph:

“I wondered whether it clearly addressed the question of Mr Staley’s awareness as well as involvement in unlawful conduct. This is what I meant when I said “I’m not sure this is quite the FCA’s point. I think they are probably more worried about judgement than involvement in wrong-doing” ”

In his oral evidence, Mr Higgins said by “judgement” he was referring to “Awareness, should he have been aware, would he have been aware of what was going on?”

Mr Hoyt said that he would leave the last paragraph in. He responded:

“I understand this may not be what Jonathan is looking for, but it creates a nice record that you and Crawford have reasonably looked into this and, based on what you found, concluded that no further inquiry was warranted.”

As the Authority submitted, this shows that Mr Hoyt considered that even if the last passage did not answer the enquiry made as Mr Higgins had understood it, it was of assistance in memorialising the steps Barclays had taken, which is consistent with Mr Davidson’s evidence that the Letter was intended to ensure Barclays set out the steps it had already taken. Mr Hoyt confirmed this understanding in re-examination, noting that:

“I thought that it was important for the record that Mr Higgins show that we had looked, and that we had asked, and that we were comfortable and that we had heard from Mr Staley that he was resolute that he had never seen anything, you know, in connection with – with the crimes that Mr Epstein was charged with.”

As we shall see, prior to the draft of the Letter referred to above having been prepared, the initial approach taken by Mr Hoyt in preparing a response to the Authority’s enquiry was to prepare a document setting out the history of the relationship between Mr Epstein and Mr Staley. This approach is clearly consistent with an understanding on the part of Mr Hoyt and Mr Higgins that this was necessary in order to satisfy the Authority’s request.

Mr Hoyt’s evidence was that when he returned from New York where the Bowdoin College Talking Points were created, he:

“turned back to the request from the FCA, which I thought would begin with a statement from Mr Staley to Mr Higgins. I took the substance of the Bowdoin talking points and went to transpose that into a draft of a note that would come from Mr Staley to Mr Higgins laying out essentially the same content as relevant to the FCA's enquiry.”

The first draft of this document that Mr Hoyt prepared on 16 September 2019 opens with the words:

“Dear Nigel, In light of recent press attention concerning Jeffrey Epstein, I am writing this note to document for you the history of my connection to Epstein.”

Although, as we shall see, the form of the Letter took a different approach to that in the initial drafts, the final version of the Letter indicates that Barclays understood that Mr Davidson’s enquiry required Barclays to confirm the steps that they had taken to satisfy themselves as to the nature of the relationship between Mr Staley and Mr Epstein. The Letter starts with the following statement:

“I am writing to close the loop on your request for assurance that we have informed ourselves and are comfortable in regard to any association of Jes Staley or Barclays with Jeffrey Epstein.”