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Barclays charged with FCPA allegations over corrupt hiring practices in Asia

2019-11-08 14:09 Friday

Barclays has joined a growing list of financial institutions that have paid a penalty for violations to their internal accounting controls and records due to questionable hiring practices in the Asia-Pacific region.


The UK bank has agreed to pay U.S. regulators a total of U.S.$ 6.3m to settle allegations that the firm broke rules outline in the Foreign Corrupt Practices Act (FCPA) from 2009 until around August 2013.

The Securities and Exchange Commission (SEC) alleged that Barclays' businesses within the Asia-Pacific region awarded "valuable employment" to friends and relatives of state officials and non-government-related client associates.

Several of the offers of work were given as a personal benefit to officials and executives in expectation that the firm would gain or retain business in investment banking, according to the anti-corruption regulatory body.

In detail, the SEC says Barclays hired around 117 candidates connected to or referred by overseas government officials or non-government clients during the timeframe. Most of them were hired via an unofficial internship scheme called the "work experience program". At least a number of them were hired into Barclays' more formal graduate program, internship scheme or given permanent positions.

According to the SEC, the bank fell short of devising and maintaining a system of internal accounting checks around its hiring practices. The bank failed to give reasonable assurances that its employees "weren't using employment as an improper inducement in violation of company policy and the FCPA."

APAC employees at the bank, in regards to instances of these alleged hires, falsified corporate records to hide the true identity of the individual or entity requesting that a candidate be taken on and the reasons for giving them the job, the SEC explains.

The SEC alleges Barclays had anti-corruption and anti-bribery policies in place that included rules against providing employment in exchange for business, but from 2009 to 2013 it failed at effectively training APAC employees or monitoring their overall compliance. Local staff and compliance team members were unfamiliar with or didn't understand the policies - particularly those in relation to hiring, says the commission.

For example, the SEC says, one senior executive claimed he didn't know that offers of employment were considered items of value or that offers must not be used to obtain business deals. Another banker who was employed at Barclays' offices in South Korea and Hong Kong for around fifteen years from 2005 said he did not know about the FCPA until 2013.

Before June 2009, local compliance officers were unaware of the practice of hiring interns who were friends and relatives of clients, the SEC reports.

Barclays settled the Commission's action without denying or admitting wrongdoing. Under the anti-corruption settlement terms, it must pay a U.S.$ 1.5m civil penalty.

The SEC says that, in reaching the agreement, it took Barclays' co-operation, self-reporting and remedial acts into account. According to the Commission, Barclays reported the conduct at issue voluntarily and, before their investigation, carried out remedial steps including terminating senior executives and other employees involved in the alleged misconduct. It also revised its hiring procedures and policies and updated its compliancy programs.

Barclay's co-operation included providing facts developed during its own internal investigation, letting employees be available for interviews, providing presentations regarding its hiring processes and voluntarily producing detailed records including spreadsheets related to specific hiring circumstances.

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