Jes Staley wasn’t the first financial-sector heavyweight to step down after reports surfaced that he had ties with the late, notorious Jeffrey Epstein.
Preceding the CEO of Barclays to the exits was billionaire Leon Black, CEO and chairman of Apollo Global Management, a private equity firm.
Similarities between the Staley and Black stories are useful for crisis communicators.
The main takeaway for those working in regulated industries and businesses based on faith and honesty is to answer questions truthfully and completely.
Similarly, boards in these industries are advised to dig deep into allegations against senior executives, no matter how troubling or unpleasant.
These takeaways are neither revelatory nor deep. Still, two successful men seem ruined, their former companies hurt, because they failed to follow it.
Chairman Yes, CEO No
In January 2021, amid questions about ties to Epstein, Black announced he was stepping down as CEO, but would remain chairman.
Two months later, in March, Black said he’d also leave the chairman’s job. Officially, Apollo’s line was that Black’s health problems prompted him to relinquish the chairman’s seat.
Those ‘problems’ stemmed from the results of an independent investigator’s report of Black’s ties to Epstein. Black initiated the report in October 2020, hoping to clear his name.
At the time he claimed the fees were legit and insisted his relationship with Epstein was “limited” and professional. This followed several NY Times articles, including one alleging a payment of “at least” $50 million from Black to Epstein.
Black was mostly correct in his defense, but not completely.
$150 Million, Not $50 Million
The investigator’s report found Black paid Epstein $158 million between 2012 and 2017, for tax- and estate-planning. The payments, it said, were legitimate.
Yet the damage was done. Black’s “limited” relationship with Epstein seemed anything but. Probably most important was that Apollo shares were off 15 percent since the Times’ stories broke.
Despite media allegations to the contrary, investigators found no evidence that Black was part of Epstein’s sexual activities with underage women. Those charges were made later.
Indeed, a pair of former models accused Black of sex crimes, including rape, and participating in Epstein’s sexual ring. The Manhattan district attorney is investigating Black, reports say.
A Growth Industry
As salacious and unpleasant as it is, the Epstein story appears in this edition of Crisis Insider because odds are that his story–and the names of other executives and celebrities–soon may spill into the news again.
“The list of names [tied to Epstein] will continue to grow as court cases continue,” predicts Mike Paul, president, Reputation Doctor LLC.
Scheduled for the Monday after Thanksgiving is the start of a federal trial of British socialite Ghislaine Maxwell.
Reportedly one of Epstein’s closest friends, Maxwell, 59, pleaded not guilty to sex trafficking charges. In plain parlance she’s accused of funneling four women younger than 18 to Epstein between 1994-2004.
It’s the sort of high-profile case the New York and national media love. Even pre-trial moves are news, particularly because Maxwell’s lawyers have argued that their client’s jail accommodations are akin to those of Hannibal Lecter.
A convicted sex offender, Epstein died August 10, 2019, of hanging, at aged 66. At the time, he was in his cell at a NY detention center awaiting trial on federal charges of sex trafficking of minors in FL and NY. Authorities ruled his death a suicide.
Also a Limited Relationship
In a way, Staley’s story is worse than Black’s. It seems Staley learned nothing from Black’s mistakes. Was Staley not watching the Black affair? Or did Staley think he could hoodwink regulators when Black failed to do so? These questions likely will occupy classes in crisis PR for years.
Before coming to Barclays, Staley, 64, headed private banking at JPMorgan Chase. As such, in 2000, some 15 years before joining Barclays, super-rich Epstein was Staley’s top client at JPMorgan. Similar to Black, Staley’s contention was that his relationship with Epstein was purely professional and limited.
Another similarity with Black, at least initially for both men, is that there are no allegations that Staley partook in any sex crimes with Epstein.
Sometimes, though, merely an association with a convicted sex offender and an alleged child sex trafficker is enough to create an issue or crisis.
For example, when the Staley-Epstein relationship became public in early Feb. 2020, one of the bank’s largest customers, Sherborne Investors, urged Barclays’ board to oust Staley ASAP.
Sherborne’s chief, activist investor Edward Bramson, claimed rumors about Staley had escalated into a reputation crisis for Barclays. Later, Bramson referred to the hubbub as “a circus.”
More to the point, and similar to the Black situation, shares of Barclays were dipping with reports about the CEO.
Staley Hangs Tough
Staley, though, hung on as British regulators began to investigate his Epstein connection. With rumors swirling, Staley assured colleagues his position was secure. He wasn’t “going anywhere,” he said.
Staley’s miscue, besides not taking notes on Black’s situation, was how he responded to Barclays’ officials when they, on the request of Britain’s Financial Conduct Authority (FCA) and another U.K. regulator, The Bank of England’s Prudential Regulation Authority (PRA), asked about his relationship with Epstein. The regulators began digging in February 2020.
Based on what Staley told his board, Barclays reportedly relayed to the FCA and PRA that the relationship was, similar to Black’s, totally professional: banker to client.
In addition, during a February 2020 call with reporters, Staley said his involvement with Epstein “tapered off” in 2013, when he (Staley) left JPMorgan.
He claimed the last time he’d had contact with Epstein was “middle to fall” 2015. An American, he joined Barclays as CEO in December that year.
Two Trips Slipped His Mind?
A slight problem. Staley’s alleged final contact with Epstein was a doozy.
In March 2020, the Wall St Journal and other outlets reported that Staley and his wife visited Epstein’s private Caribbean island, Little St. James, twice, in April 2015. Staley is an avid sailer.
The Journal reported then that neither the bank nor Staley mentioned the visits publicly.
Eventually the board, though, told the newspaper Staley “disclosed” the visits.
Ironically, Staley had free time to cross the Atlantic on his boat and visit Epstein on Little St. James two times because he was between jobs at that point in 2015. Barclays’ board had not yet named him CEO.
Another issue, as yet unresolved, is a trove of some 1,200 emails between Staley and Epstein during a four-year period (2008-2012). Staley’s former employer, JPMorgan, forwarded the emails to UK regulators.
While it’s possible a limited relationship could generate 1,200 emails, the perception seems to be that the Epstein-Staley ties were deeper than the now-former Barclays chief admitted.
In addition, media reports hold that regulators believe the language in the emails indicates more than a professional friendship. Other reports say regulators have several questions about some of the words used in the emails.
A Previous Incident
Another factor hurting Staley, or perhaps explaining why he thought he could outsmart regulators, was his history. He survived another, earlier reputation-damaging incident.
In 2018, the FCA fined Staley $870,000, essentially it was a wrist slap. FCA claimed Staley exploded over a whistleblower’s allegation about a senior bank employee and ordered staff to uncover the whistleblower’s identity.
Allegedly, Staley authorized a transatlantic probe to find the whistleblower. The New York State Department of Financial Services fined Barclays over the same incident.
Staley apologized, admitted he’d “made a mistake.” Barclays clawed back $680,000 of his 2016 pay.
Still, Staley survived the incident. Perhaps that empowered him to think he could edit his ties to Epstein and survive again.
Nicole Rodrigues, CEO and founder, NRPR, offers a possible explanation for Staley’s alleged ‘memory loss’ and the sort of portrait he painted of his relationship with Epstein
“People are afraid when they’re under pressure. They don’t stop and think about the truth and what could happen if they don’t admit what they’ve done,” she says.
Moreover, traditional legal advice is to disclose as little as possible, Rodrigues adds. “Most lawyers don’t understand reputation and public opinion.”
A Safe Space for Truth
Her advice to executives under the klieg light is to “go off in a quiet place and sit and think about the situation” before speaking with regulators or media.
She’s done this with several executives, Rodrigues tells us.
“‘If you want me to help you, you must tell me the truth,’” she’s told clients, adding, “‘I’m not here to judge you, this is a safe space. But, I can’t help you if I don’t know the truth,’” she’s said.
Rodrigues and Paul emphasize the perception that Black and Staley were less than truthful was a major factor in their departures. It’s not new, though.
“For decades, financial executives worldwide have been tied to” unsavory activities and people “and their lies about them,” Paul says.
From Dark to Light
Both crisis pros also agree what’s done in the dark often comes out in the light, especially when regulators and social media are searching.
“Do your best,” Rodrigues says, “to keep your nose clean...And if you know you’ve done nothing wrong, it’s OK to come to the table and tell the truth.”
She and Paul admit that’s easier said than done.
At this point, of course, there’s no proof Black or Staley committed crimes of any sort with Epstein.
And both lament their ties to him.
Staley has vowed to fight the investigation’s conclusions that he’s unfit to run Barclays.
All this makes no difference to Paul. A tie of any kind to Epstein is toxic, he argues.
“Very powerful men at the top of finance tied to an alleged human trafficker and alleged rapist...of minors is a scandalous label no one returns from reputation-wise,” he says.
Paul adds that Staley “now faces the consequences of his alleged lies to regulators about his relationship for decades with Epstein.”
Not Crime, But Reputation
Rodrigues has a variation on this take.
“In both cases it’s not about [Black or Staley committing] crimes, but reputation,” she says. Apollo and Barclays no longer wanted “the drama” surrounding Black and Staley, respectively, dragging down each company’s reputation and, of course, share price.
“Reputation impacts dollar signs,” Rodrigues says. In both cases that meant it was “time to go,” she adds.
Having Black and Staley depart were attempts to avert long-term reputation crises, Rodrigues says.
In parting, Staley will receive his annual salary of $3.3 million in cash and shares, plus a pension allowance of $164,000 and other benefits through next Oct. In addition, Barclays will consider reimbursing him for costs of relocating to the US.
Besides the start of the Maxwell trial later this month, another wrinkle has appeared. Days before our press time, the U.S. Virgin Islands announced a probe into Barclays’ activities with Epstein.