There are two ways to look at the news that Antony Jenkins, the chief executive officer of Barclays Plc, will turn down his $1.6 million bonus this year.
One is that it is another positive step to reforming the embattled bank, which among other scandals was fined half a billion dollars in June for trying to manipulate the London interbank offered rate. The alternative explanation is that this is a public relations gambit intended to mute public outrage and get back to business as usual as soon as possible.
After all, coming off its annus horribilis of 2012, the last thing Barclays wants is any discussion of the recent disclosures about the absolutely shocking behavior of Andrew Tinney, the former chief operating officer of the bank’s high-end investment division, then known as Barclays Wealth. Never heard of the 46-year-old Tinney? Well then, you’re in for a real treat.
A year ago, Tinney, who made about $8 million a year helping to run a division with nearly $300 billion under management, commissioned an outside report of the workplace culture at his division by the consultancy Genesis Ventures. It was a response to a 2011 Securities and Exchange Commission finding of “deficiencies and weaknesses” at the U.S. unit of Barclays Wealth, known as BWA, and its compliance with banking laws. No small matter.
The U.S. business, run by former Merrill Lynch banker Mitch Cox, who joined Barclays in 2009, is at 200 Park Ave. At Tinney’s direction, two investigators from Genesis interviewed more than 50 U.S. employees and discovered a business more than a little out of control, thanks in large part to Cox’s boorish management style.
“The senior team portray themselves as all-powerful and all-knowing,” Genesis found. “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 continued: “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 organization down, to ignore, put off, and even deride risk and compliance issues.” One Barclays employee told Genesis that when he presented a risk report to his superior, the executive called it a, well, piece of excrement and threw it across the room.
As reported first by the Daily Mail of London, Tinney had the Genesis report messengered to his Surrey estate last April. (At that point, the bank’s CEO was Robert Diamond.) Horrified by what he read about the business he was supposed to be managing, he fed what he thought was the only copy into a shredder and, according to the paper, “denied all knowledge of it ever having existed.”
That might have been the end of the story, except that in September an anonymous whistle-blower — probably a Barclays insider — emailed Jenkins, who had just replaced Diamond, and Marcus Agius, then Barclays’ chairman, and told them the wealth division was “deeply flawed,” had a “corrupt culture” and oh, by the way, why don’t you see if you can get your hands on the Genesis report. Thinking he was still getting away with his scheme, in early October, Tinney authored a portion of another report to Jenkins about the wealth business but omitted any mention of the damning Genesis report.
On Oct. 29, Barclays told the Financial Services Authority, its U.K. regulator, about the whistle-blower emails and hired a law firm to investigate whether there was a Genesis report. Dubbed Project Helium, Barclays gave the law firm access to more than 60,000 documents and e-mails on the Barclays computer system.
Eventually, the law firm found the Genesis report. When it interviewed Tinney in December, he insisted it was “not a report” at all and therefore didn’t need to be disclosed. But he admitted he shredded the document. Barclays put him on indefinite leave. In early January, the full Project Helium report was given to Barclays. On Jan. 14, Tinney resigned. When the Daily Mail spoke with him that week, Tinney said, “I’m sorry but I shouldn’t be having this conversation with you. Can you speak with the company?”
Yet Tinney’s story has barely caused a ripple on Wall Street or in the financial press. Barclays offered a typically bland statement about Tinney’s departure. Jenkins sent a holier-than-thou memo to the bank’s 140,000 workers filled with high-minded platitudes on “respect,” “integrity” and “stewardship,” and said everyone must sign a new code of conduct. Now, according to the Financial Times, U.K. regulators are looking into whether Barclays fraudulently loaned Qatar money to invest back in the bank to help it avoid a government bailout in 2008. Between this revelation and the continuing Libor saga, Jenkins is going to run out of bonuses to give back.
While the revelations about insufferably bad behavior on Wall Street continue unabated, the public seems to have grown tired. The banks, meanwhile, continue to water down the new regulations mandated by the Dodd-Frank financial reform package designed to govern them.
All the while, Wall Street CEOs fly off in their private jets to Davos, Switzerland, where they work hard to convince the media elite they are changing the corrupt culture at their firms. Frankly, it’s all a pathetic sham.
This is how we end up with a world where overpaid bankers such as Andrew Tinney think nothing of destroying the evidence of extreme malfeasance at one of the world’s leading banks and then lying to their bosses about it. Have we reached the tipping point yet?
Cohan, the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. He was formerly an investment banker at Lazard Freres, Merrill Lynch and JPMorgan Chase.