Exposed: The regime of fear inside Barclays - and how the boss lied and shredded the evidence

• British executive at £184bn broking arm hid damning report on bullying
• Intimidated staff forced to flout rules in pursuit of 'revenue at all costs'
• Huge blow to Barclays reputation as new CEO struggles to relaunch bank

By Simon Watkins: A senior Barclays executive has quit after it was revealed that he secretly shredded a bombshell report that described a key part of the bank as ‘out of control’.

Andrew Tinney, who was chief operating officer of the bank’s high-end private investment division, Barclays Wealth, destroyed the explosive dossier at his £5 million Surrey mansion after reading its shocking contents.
He then misled banking regulators and Barclays chief executive Antony Jenkins – the man brought in to clean up the bank after the Libor rate-fixing scandal and the resignation of Bob Diamond – by pretending that the report had never existed.
But he finally owned up to suppressing it, and last week Barclays made an internal announcement that he had resigned from his job.
The dossier, seen by The Mail on Sunday, exposes a culture of fear, intimidation, bullying and mismanagement at the bank’s stockbroking and investment arm,  which handles client assets worth £184 billion.

The Mail on Sunday’s revelations come at an acutely embarrassing time for Barclays, as bosses try to regain public trust after a series of deeply damaging scandals.
The report which Mr Tinney suppressed paints a devastating picture of incompetence and arrogance at the bank, showing that executives:

• Pursued a ‘revenue at all costs’ strategy.
• Fostered a culture of fear and intimidation.
• Were ‘actively hostile’ to the idea of compliance with banking rules.
• Presided over a ‘broken culture’ where problems were ignored or buried.
• Allowed the business to spin ‘out of control’.

But Mr Tinney, 46, shredded the only hard copy and ensured that its contents were not entered into the Barclays computer system.
Last Monday, his colleagues learned that he had quit as chief operating officer of Barclays Wealth, where he received a package worth around £5 million a year in salary, bonus, share options and incentive payments.

Mr Tinney received no payoff from the bank, so avoiding embarrassing questions that would have inflicted further damage on  Barclays’ already sullied reputation. However, Barclays could  face fines running into millions if it is shown to have ignored banking rules.

Speaking at his six-bedroom home in Weybridge last night, Mr Tinney said: ‘I’m sorry but I shouldn’t be having this conversation with you. Can you speak to the company?’
The investigation which he tried to cover up in March last year was triggered after regulators found ‘deficiencies’ in the New York division, Barclays Wealth America (BWA).
However the problems pervaded the entire Wealth division, which is based at Canary Wharf in London, according to one member of the inquiry team.
Compiled by consultancy firm Genesis Ventures, the report said: ‘The current leadership 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.
‘Management consciously failed to invest in necessary technology,  people and safeguards that it   knew it needed, leaving these areas understaffed, under-skilled, under-supported and in disarray.

‘A conscious choice was made to ignore compliance until an issue was raised by the regulators – actively inviting intervention. There has been a total lack of accountability by the senior team.
‘Management have created a culture of dominance and fear that has removed escalation of issues [the reporting of concerns up the management chain] and created a siloed organisation with serious flaws. Issues do not flow up but are buried, stopping any solution ever coming to light.
‘This culture immediately removes anyone who opposes Mitch [BWA managing director Mitch Cox] and his team or who expresses dissent in any way… and prevents any counterbalance to the “revenue at all costs” strategy.’
One banker questioned by the investigators said: ‘When I reported a compliance issue to a member of ManCo [management committee], I was told, “I don’t have time for this bull****.’ Another said: ‘When we presented the risk report, [an executive] said “This is a piece of s***” – and threw it across the room.”’
One senior manager is accused in the report of being ‘incredibly defensive’ and of failing to take regulatory issues seriously. Another executive is said to have been determined to stop the inquiry team from gathering information. This individual, the report says, was regarded by colleagues as a ‘key contributor to the current culture of fear’.

Blue in the face: Protesters dressed as suited eagles on Barclays cycle hire bikes demonstrated outside the Royal Festival Hall last year

In one of the most devastating sections of the dossier, the consultants say: ‘The senior team portray themselves as all-powerful and all-knowing… and people chose to disagree with them at their own peril. It is a mentality of superiority which, when combined with other deficiencies, stops the team from tackling their blind spots. When those deficiencies are in compliance, this results in serious issues that no one else has the power to address.’
The report adds: ‘Stories circulate of individuals who have been fired because they brought issues to the management’s attention. It is culturally acceptable at BWA, from the top of the organisation down, to ignore, put off, and even deride risk and compliance issues.’
Mr Tinney had commissioned the report after regulators at the US  Securities and Exchange Commission found ‘deficiencies and weaknesses’ in BWA’s compliance with federal banking laws in 2011. Two investigators from Genesis Ventures interviewed more than  50 BWA employees as part of  the inquiry.
When the process was complete, Mr Tinney arranged to have the report biked to the exclusive Surrey estate where he lives.
Apparently horrified by its contents, Mr Tinney fed the document into a shredder, then denied all knowledge of it ever having existed. However, the astonishing saga did not end there.
In September, an anonymous whistleblower, thought to be a Barclays insider, contacted chief executive Antony Jenkins and then chairman Marcus Agius, describing the culture within the Wealth division as ‘deeply flawed’ and asking them to look into the mystery of the disappearing report.

After two emails from the whistleblower, Barclays asked City law firm Simmons & Simmons to launch a new investigation, which was dubbed ‘Project Helium’.
Simmons lawyers were given access to more than 60,000 documents and emails held on the Barclays computer system.
The law firm concluded that Mr Tinney had failed to tell his own bosses and US regulators about the Genesis Ventures report, even when asked directly about it.
The Simmons report, which has also been seen by The Mail on Sunday, says Genesis ‘communicated some or significant parts of the evidence they gathered, their key findings and their recommendations… to senior employees in  Barclays Wealth’ in April and May last year.
Among the executives who were made aware of the report’s explosive contents were Barclays Wealth chief executive Tom Kalaris and head of the US operation, Mitch Cox.
Yet five months later, there were further signs of a cover-up in the drafting of a letter to Mr Jenkins, who by then had been alerted to the existence of the Genesis dossier by the anonymous whistleblower.
The memo was from former bond trader Mr Kalaris, but the Simmons report said Mr Tinney played a ‘leading role’ in writing it.
In the final version, Mr Tinney removed the sentence ‘Genesis Ventures was retained to conduct a Compliance Culture Audit of BWA’ and replaced it with a phrase  suggesting that the consultants had only undertaken ‘data-gathering interviews’.

Simmons also says Mr Tinney failed to inform US regulators of the existence of the report, even after the Federal Reserve, the US central bank, asked BWA for a copy.
The Simmons report is now in the hands of the Financial Services Authority, which is considering what action should be taken against Barclays.
Last week Mr Jenkins told the bank’s 140,000 staff that bad behaviour would no longer be tolerated, saying: ‘We must never again be in a position of rewarding people for making the bank money in a way which is unethical or inconsistent with our values.’
The bank said last night that Barclays Wealth customers had not suffered because of the cultural problems, and reiterated Mr Jenkins’s message to staff, saying: ‘We acknowledge that there is a need to change culture across Barclays in all areas of our business, and we have set out a plan to do so.’
The spokesman said Mr Kalaris had not known about the Genesis report until the recent investigations, adding that the note from Mr Kalaris to Mr Jenkins had been ‘misleading’ but had relied on Mr Tinney’s account of events.
The bank also said that while the Genesis report had not been given to Mr Kalaris or other managers, concerns about the culture had been relayed to him in April last year and he had ‘initiated a broad programme for addressing those findings, which is still continuing’.

Last night, Business Secretary Vince Cable said: ‘This report confirms in rather graphic language what was widely believed to be the highly unethical corporate culture in Barclays until very recently.
‘I do applaud the commitment of Barclays’ new chief executive Antony Jenkins who has made it clear that he wants the bank to turn its back on this very damaging culture that brought the banking industry into so much disrepute.’
Labour MP John Mann, a member of the Treasury Select Committee, said: ‘This is another sign of Barclays’ willingness to pursue profit at all costs.
‘How much will they be clawing back from the bonuses that Mr Tinney and his former colleagues received in previous years?’
Mr Jenkins took over as chief executive from swashbuckling American Bob Diamond, who was forced to resign last July after the bank was fined £290 million by regulators in the UK and US for the role it played in manipulating the key inter-bank borrowing  rate Libor.
Barclays is also caught up in the misselling of Payment Protection Insurance, for which it has set aside around £2.5 billion in potential compensation. It has hired Sir Hector Sants, a former chief executive of the Financial Services Authority to oversee its new ethical regime.
Mr Tinney, became chief operating office at Barclays Wealth in September 2009. He joined from Deutsche Bank where he spent six years as chief financial officer for its Asia Pacific region and later for the UK.
He lives with his 42-year-old designer wife Cherie and their two children in the home he brought for £4 million in March 2008. It is on a private road, protected by security guards. The couple married in 2001 at Highclere Castle, the Berkshire stately home where Downton Abbey is filmed.

Brokers lived in fear of the New York boss who ruled with 'an iron fist'

The world of investment banking is not known for its meek and mild characters.
But the colourful cast of high-powered executives in charge of the Barclays Wealth operation in America were in a macho universe of their own.
Staff at 200 Park Avenue, the Manhattan building where the British bank’s US operation is based, had to endure a ‘culture of fear’, according to independent consultants who conducted dozens of interviews with employees. They felt unable to raise their concerns with management, and this sense of unease even extended to the bank’s compliance team, whose job is to ensure that regulatory rules are observed.

Under strain: A Barclays worker in the US, not implicated in the new scandal

Staff quoted in the Genesis Ventures report paint a vivid picture of a business where ‘bullying and intimidation’ were commonplace. The interviews took place in New York, but the global Barclays Wealth operation is run from London, and the consultants made clear that they thought the problems within the organisation extended to the top of the management structure at Canary Wharf.
The central figure in the Manhattan operation is Mitch Cox, a former Merrill Lynch banker who appears to have brought a number of colleagues with him when he joined Barclays in 2009.
As managing director of ‘global investment and products’ he reported directly to Barclays Wealth chief executive Tom Kalaris.
One banker said: ‘Mitch rules with an iron fist – he has no ability to listen.’  Another commented: ‘I know of several cases where good people have left because of bullying and intimidation by Mitch and his tribe.’

Central figure: Global investment chief Mitch Cox

Normal working practices virtually came to a halt, according to many.
‘A lot of people are afraid to make decisions. If you fear you will be punished you won’t make a decision,’ said one staffer. Another commented: ‘When there is a problem, management say, “Give me a name. Who made this decision?” ’
‘The management team are quick to make scapegoats,’ said one source. Some staff believed the only way forward was for Mr Cox to be removed: ‘Taking Mitch out was the desired course of action by many interviewed,’ the report concluded.
Despite the criticism, the consultants said that Cox was a skilled banker and if ‘checks and balances’ were in place he could be valuable to the group.
Worryingly for a business where managing risk is critical, one banker told the inquiry team: ‘When we presented the risk report,  [a manager] said, “This is a piece of s***” and threw the report across the room.’
The aggression and intimidating attitude of some bosses compounded what the consultants felt was a weak compliance team in the New York office. ‘The department is in disarray,’ said one Barclays Wealth banker. ‘They are nervous and lack a strong leader.’
According to another, the compliance team was ‘not strong enough to deal with the dominant .  .  . fear culture’.
Consequently there was a general reluctance to raise concerns with senior management  and serious problems were not addressed, even though US law gives whistleblowers protection from victimisation and recrimination by employers.
Mr Kalaris said last night: ‘The criticism of Mitch Cox in the Genesis Ventures work was a snapshot of opinion at a particular point in time from a small sample.
‘To be clear, the recommendation of the Genesis Ventures team was that he should stay with Barclays and play a big part in solving the cultural issues which had been identified. That is precisely what he has done, and I have full confidence in his leadership.’

Source

banzai7