Monday, January 18, 2021

Barclays to pay SEC $6.3m over Anti-Bribery Hiring Probe

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Barclays has agreed to pay the SEC $6.3m to settle offenses related to the hiring of relatives of public officials in Asia to help win or retain investment banking business. 

The settlement includes a $1.5m civil fine and $4.8m of disgorgement and interest, according to the US Securities and Exchange Commission (SEC) which highlighted its alleged hiring activities in China, Hong Kong and South Korea.

According to the SEC, Barclays hired 117 people between April 2009 and August 2013 who had been referred by or connected to government officials or non-government clients, and placed them in permanent jobs, its graduate program, its formal internship program or an unofficial “work experience program.”

The SEC said Barclays lacked internal controls to ensure that its employees were not engaged in bribery with respect to these “relationship hires.” It also said some Barclays employees falsified records to conceal who was requesting specific hires and the reasons for those requests.

In April 2009, a senior executive in APAC approved an “unofficial intern” program for Barclays South Korea that was separate from Barclays’ formal internship program. From when it began until 2013, around half of the candidates in this program had a connection to Barclays’ clients.

[su_pullquote]Barclays hired the son of an executive at a South Korean state-owned company that bankers were pursuing for business. Soon after, the bank secured a deal to act as joint lead manager on a $1bn bond issuance for the company that generated $971,000 in fees.[/su_pullquote]

The senior banker responsible for the intern program in South Korea said “the key factor behind relationship hiring decisions was what business the client could deliver to the bank,” the SEC said.

Similarly, in March 2013, bankers in Barclays’s Asia-Pacific division hired the nephew of the chief executive of one of its key business clients. Two months later, Barclays recorded $2.6m in revenue from the CEO’s company.

These hiring practices violated the Foreign Corrupt Practices Act of 1977.

Without admitting or denying wrongdoing, Barclays agreed to pay $6.3m to settle the probe. The bank’s spokesperson refrained from commenting on this matter.

The SEC said it considered the bank’s self-reporting, cooperation, and remedial acts.

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