matter of Barclays PLC and the Security Exchange Commission

matter of Barclays PLC and the Security Exchange Commission

The paper will discuss the matter of Barclays PLC and the Security Exchange Commission. In September 2019, SEC made an announcement that stated that Barclays PLC was supposed to pay approximately $5.9 million. The amount was settling charges due to a violation of the FCPA. The company went ahead to hire families and relatives connected to foreign government officials. The exercise aimed to influence the family member concerning their investment and banking business. Based on the order released by SEC, Barclays PLC, located in the Pacific Region of Asia, provided a tangible employment to most of its friends, associates, and relatives in government position to retain and obtain specific business benefits. The report has also indicated that most of the employment practices were conducted in unofficial wrong intern program. Half of the workers in the bank obtained legal hiring through the official Barclays program designed by the organization.

SEC determined that Barclays PLC was unable to maintain and devise a program of accounting internally in connection with the hiring process. It was also determined that the company failed to justify that the hiring process was sufficient. Therefore, the company did not prove its workers were not offering bribes to foreign officials. The act violates the FCPA and the policy of the company, which prohibits relationship hiring. Additionally, the workers of the company went ahead to falsify corporate records that provide the true identity and origin of all workers. The employees also tampered with a document that includes information on the reason for hiring specific people in the company.

Summary of the case

The proceeding for the trial is arising from violation of Barclays PLC in connection to its records and books. The organization also violated the internal accounting controls of FCPA. Barclays PLC provided continued employment from the start of 2009 up to the end of 2013. According to the report that was given by the SEC, the company acted contrary to FCPA requirements. Most of the executives that were hired in the company were benefits of relationship hiring. A good number of workers were allowed to the company during the period where some of them secured permanent positions. The SEC investigation noted that employment was an extension of personal benefits with management. The bank wanted to be aimed at retaining and obtaining favorable investment policies concerning the banking business. Furthermore, the company hired approximately 117 workers in different positions. The workers were either referred to or had a close connection to specific foreign government officials. Some of the candidates have a personal relationship with clients outside the government. It was uncovered that the hiring process was performed using an unofficial program referred to experience work program. A portion of the workers obtained employment in the right way through the use of formal Barclays internship program.

Respondent

Barclays PLC can have described as a holding bank company, and its headquarters are located in London. Some of the subsidiaries that are provided by the bank include wealth management, investment banking, offers, and various sales on securities. The bank has complied with the commission pursuit by registering with the American Depository Receipts of the Exchange Act. Therefore, the company has been obligated to make periodic reporting in compliance with the Commission following section. The action is usually performed under the supervision of the exchange act. Barclays and its subsidiaries are generally regarded under Barclays Group.

Barclays PLC is a global bank, and it among the significant subsidiaries of Barclays. Barclays Bank PLC is responsible for developing and making implementation of policies and procedures. The company has the power to make a global directive that applies to all business units that operate under Barclays Bank PLC and its subsidiaries. Barclays in the Asia Pacific Region comprises of all the subsidiaries of BBPLC in the region. All the workers that were connected with inappropriate hiring activities were from the Asia Pacific Region.

Facts

Barclays publicized corruption and no bribery policies between 2009 and 2013. The procedures that were designed the company gave out directions that were supposed to ban employment offered in exchange for business benefits. The company failed to provide training to its employees and making sure that they worked in line with set policies. The bankers of the company lacked adequate information that was supposed to help them understand strategies that are related to anti-bribery and corruption. Therefore, the member lacked familiarity with significant company policies that were mainly connected with hiring. For instance, a senior executive in the APAC claimed that he was not aware that employment offers had such a high value. The executive also noted that he had no idea that employment offers cannot be used to obtain business benefits. One of the bankers who worked for Barclays in the business unit in Hong Kong and Korea claimed that he was not aware of FCPA policies until 2013. An interview with various members in the organization determined that a good number of the workers were not aware that Barclays included employment offers and internships under anything of value. When the banker was presented with an anti-corruption and policy, he stated that he has never seen it before. The banker has been working for the organization since the year 2005. A senior compliance executive also indicated that he has never taken time to read the corruption and anti-bribery policy of the company. Based on the requirements of the company, the procedure requires pre-approval from the department of compliance before the company offers an internship to various public officials. The compliance department needs to certify the policy before the company presents it to close family members that may be interested in the job. The executive stated that it was in 2013 that he was made aware that the internship was regarded as an item of value. The aspect came to his knowledge after being consulted for compliance.

In the year 2009, the unofficial intern program was approved by a senior executive from APAC.M. The program was different from Barclays’ official internship program. According to a simple plan, the main aim was to offer experience and work opportunities to college students in Korea. On some occasions, the policy will provide relationship benefits for the students in various positions upon the application of qualified candidates. The statics indicates that half of the students in the college have a personal relationship with the client, which was Barclays in this case. Executives that were responsible for the program stated that the main aim of the program was based on what business the client provides to the bank. The senior executive further said that relationship hiring was grounded on the value and importance of the client. He also stated that recruitment was made if the business was going to benefit the business relationship. Additionally, relationship hiring was to be mutually beneficial, and it is supposed to open doors and help the bank in winning various business opportunities. The activity was first identified in Korea, and then it spread to other regions that were under APAC. In the same year, a banker working in Seoul suggested that the bank should offer an internship to the son of the key decision-maker of the company. The essential decision-maker was a foreign official owning key entities in Korea. It was the same time that Barclays, located in Korea, was trying to obtain proper mandate as the lead manager. The Korean decision-maker was allowed to help the bank to have access to bond offerings of various entities in Korea. The banker stated that before offering the job, they have to meet the decision-maker to confirm the business. The executive was very much aware that the action was against the policies of the bank. Barclays prohibited the management of any other person who acts on behalf of the bank to offer employment in exchange for business benefits. A senior executive of the bank prohibited and violated the policies of the bank by approving the hire. The bank was given a mandate from the entity that is owned by the state. The banks obtained a substantial benefit, where it became a joint lead manager of bog insurance worth $1 billion. The company was also able to accumulate a fee of approximately $971000.

Similarly, in June 2009, Barclay’s bank that is located in Korea, went ahead to seek endorsement from a top executive from APAC to employ a candidate in a permanent position. The request was from a Korean senior foreign official. The official was also a director of a state-owned entity that was situated in Korea. He requested employment on behalf of his close friend. One of Barclays executives explained that even if an outside candidate performed well on the interview, it was recommendable to select the candidate endorsed by a state entity. The main reason behind the explanation was to prevent the banks from losing business favors with the client. The senior executive hired without seeking review and approval from compliance. The policies of the bank require the executives must find for preapproval from the agreement before hiring new workers in the organization. In July 2009, Barclays made an approval to hire an intern requested by a foreign official in the same entity owned by the Korean state. In the same month, the bank was served a mandate by the entity for a bond deal that was worth $ 1.6 billion. The deals attracted an approximate fee of $ 1.2 billion.

By the end of June 2009, compliance officers from APAC were informed of the practices of intern hiring, which comprised of friends and relative clients. The action forced compliance officers to make a review of requests based on related terms. The reviews were grounded on possible conflicts of interest. The executives acted contrary to Barclay’s policy that was responsible for addressing the risks of anti-corruption that are related to hiring decisions. APAC compliance officers claimed that they had no information in connection with the system. APAC officers also noted that they have never read the 2009 corruption and anti-bribery policy. Senior compliance officer responsible for handling and making a review of the referrals made a confession that put his work at risk. The executive noted that he has never made a review of any information connected with clients of Barclays and their activities. He had access to the information that failed to conduct regular reviewing. The policy of Barclays required compliance monitoring when dealing with hiring. Based on this case, the same compliance manager was unable to explain what the requirement means. The officer could not explain how it was conducted.

According to the events that have been happening in this case, it is clear that relationship hiring was done without seeking consultation from the compliance department. On an occasion where the compliance department was consulted, the workers falsified documents and withheld vital information. The action made it difficult for compliance to identify and trace the identity of people requesting to be hired. Besides, the compliance department was forced to secure the approval of candidates they did not qualify for the job. Compliance officers would then justify themselves by stating that the activity was based on relationship hire, which is a potential benefit for the future of the company. In 201o, APAC executive asked for approval to hire a daughter of a government official using the graduate program of Barclays. The official one of the policymakers in Chinese enterprise owned by the state. The lady recorded a poor performance in an interview. She received a “do not hire “recommendation. She was appointed due to the relationship that existed between her father and that banker. The banker stated that the decision to hire was based on the perspective of the business. It means that the company can employ incompetent people into the organization to gain business benefits. The banker also stated that her father would help the bank to achieve a tangible business with IPOs in Hong Kong. The deal s was made in exchange with acquisition and merging. The compliance department was aware that there was a possibility of future business with some of the enterprises owned by the state. The decision of the banker to hire the daughter was only meant to improve the performance of the company. The banker also anticipated winning beneficial business opportunities that will aid the organization moving forward. Local compliance officer noted the issues the confronted senior compliance officer. The environmental compliance escalated the topic stating that it is against the policies of the company. The senior compliance officer noted that the issues would not be happening for the first time in the organization. The offer was then approved by the proposal. The officer then stated that everything would be well as long the whole hiring committee could make a confirmation that she was hired by her qualification and not for any other reason. Based on the available information, there was no evidence that the business unit availed a confirmation on hiring. However, Barclays APAC allowed the executive’s daughter to secure a chance in a graduate program in the organization.

Relationship hiring of Barclays

The organization has continued with relationship hiring grounded on requests from non-government officials and foreign government officials. The organization adopted a “work experience” program. The main aim of the adoption of the problem was to highlight procedures that can help to manage relationship hires. The program comprised of certain limits for applicants for each jurisdiction. The plan was then modified to suit and handle all referrals in the company. For instance, the program required for compliance approval for a candidate that has been presented to the company through government official and non-government officers. The business department started seeking the power to allow them to hire workers based on their qualifications using a work experience program. The program was mean to increase transparency in the organization. For instance, a work experience program was supposed to disclose all the information on the application form on the candidate. Through the program, the compliance department can be able to know whether the candidate was referred for hiring. Compliance officers would then be in a position to give specific reasons for hiring every candidate in the organization.

Despite the implementation work experience model and other procedures and controls, senior executives still operated contrary to requirements. APAC officers continued to hire workers based on personal relationships hence violating corruption and anti-bribery policy of Barclays. The works experience program failed to cover all the needs of relationship hiring. A good example is when the daughter of a foreign officer relates to a private Barclays client who was hired. The lady secured a position in a graduate program, yet she did not graduate from and college. To make matters worse, the application was made later after the company had closed the program. She was considered and given a position because her father had a special relationship with the executive of the company. The work experience program applied for a certain period, but it was ignored for some time. Senior bankers in the organization were the key driver for violation of the company policies when they were supposed to protect the company from illegal activities. The executives aimed to ensure that the company gains business benefits and maintains its position in the market.

The banker falsified the application approval information of the executive’s daughter. Application documents were concealed to protect the connection between the executive and the applicant. The candidate was then identified as an acquaintance to the executive and not a daughter to client. In November 2011, APAC allowed the daughter of their client to occupy a position work experience program. In the same month, Barclays sold $500 million of the bonds to a private bank in Korea. Barclays Bank received a fee of over $300, 000 for the transactions.

A compliance review was done in 2012 to modify the policies of the company. Despite the review, the officer never stopped hiring a candidate based on their relationship with government officials and other entities that are owned by the state. Barclay’s executives were dependent on the non-government officials to secure better deals for the organization. In 2012, an executive from a state-owned entity asked a Barclays executive to consider hiring a child to his friend. The person who was making the request was a government official responsible for regulating and controlling the entity that makes a referral. The candidate was hired instantly even though the compliance department was aware that the bank wanted to obtain a bond worth $ 2 billion. After hiring the candidate, Barclays received a bond deal from the state-owned entity. In April 2013, the bank modified internal policies that were related to referral hiring. The main of the modification and changes was to have a clear record that the bank did not make hiring to obtain or retain business deals. APAC took into consideration the changes and integrated the new policies to work experience hires. The changes had little impact on the current system based on the approval of relationship hires. It was identified that the banker used to provide wrong and false attestations. It was also uncovered that compliance provided support for hires even when the disclosure was inaccurate. Therefore, approval was done by agreement without taking into consideration of potential and pending business.

In March 2014, a banker justified the work under the proposal on hiring the daughter of an executive that it as a particular case that needed to be accommodated. The company needs to do internal IPO, and making a deal with a government official was the only way to make sure the program was successful. At the same time, the banker attested that hiring was not meant to obtain business benefits. The banker was then not able to disclose and illustrate a potential IPO to the compliance department. Barclays has an extended-standing policy that strongly prohibits any form of hiring that is meant to attract financial benefits. The organization designed a presentation that circulated in the investment region. The performance was covering a banking division called strategic hiring. It was classified as a component design action plan mean to offer satisfaction to customers. The presentation also included all the instances where banks hired children belonging to a government official. The performance got to high levels of distribution in the regions. Despite the distribution, no one came forward to reports that the action was a breach of policies of Barclays. Some senior officers indicated that strategic hiring presentation was problematic.

Barclays then made an update of its policy guidance in the reiteration of zero tolerance anti-bribery policy. The aim of the review was also to offer a reaffirmation to policies applied to various business handling, especially with government-owned entities and other clients from private sectors. The system stated that the prohibition of providing anything of value to a government official to retain a business included employment offerings to associated and family members. The new policy had a little impact on hiring practices and other operations under APAC. In 2015, an executive banker at APAC requested an internship for a son of a non-government official. The official was a general manager at the bank of the client. The manager was in charge of the US dollar position that accumulated an approximate amount of $6.1 billion. Based on the information, it is clear that the client was a potential relationship with the bank. However, a banker from APAC gave a statement indicating that providing work experience on an internship for the client will be a huge favor. The managers stated that support is significant and needed a return. Senior bankers made approval of the application. According to records kept concerning the hiring process, senior bankers never consulted the compliance department on the issue. In September 2015, a state-owned entity treasure requested to be helped in making arrangements on an internship program. The owner of the program was closely related with an executive manager and a party official. The candidate made a late application, and it was rejected. One of the bankers then forwarded the request to Chief Operating Officer in the region. The application was then sent to human resource management and some other bankers in the organization. The explanation behind the appeal was the father of the candidate holds a valuable position in the government. The executives were aware that the father of the applicant had the power to influence decision making and policies in the government. A senior officer noted that the evaluation would be done on the candidate based on merits.

The application of the candidate arrived late in the office after the application deadline. The candidate was then included in the list after communicating with APAC employees through the phone. The candidate found the way and was included on the final interview list. After the interview, the candidate recorded an unfortunate result. Interviewers failed to support the application of the candidate and noted that the candidate was technically weak. After that, the bank offered candidates a chance to work with a recruitment program. There was no evidence indicating the senior bankers consulted the compliance team. The bank implemented a policy that prohibited offering employment to family members connected with a government official. The police sought that the candidate must obtain clearance and approval from the Financial Crime Compliance of Barclays bank.

Legal standards and violations

In reference to the Exchange Act Section, the commission has the power to impose, cease, terminate an order toward an individual violating, has violated, or in the process of violating any section of the Exchange Act. The act stipulates that any person who is, was, or intending to cause a violation will be charged. The punishment will be based on various actions that were perfomed by the company. For instance, individual was aware or was in a position to know that action would have contributed to a violation. Based on the above-described conduct, Barclays made a violation of the records and books of provision as contained in FCPA. The bank was also found guilty of relationship hiring practices. Considering the section 13(b)(2)(A) of the Exchange act, Barclays was supposed to comply by making and keeping books of account. The bank was also supposed to present unbiased, accurate, fair information that reflects the disposition of assets and transactions. The internal controls of the bank stipulate that employees are supposed to provide actual questionnaires. The main reason the action was to increase the transparency of experience program hires that is required to be checked by the compliance department. The efforts of senior executives were supposed to be in line with the FCPA and policies of the bank.

Contrary to the requirement, senior executives in the bank went to review, approve incorrect compliance questionnaires. Additionally, the attestation forms were found to contain massive mistakes that affected the outcome of correct results. The arrangements failed to disclose the true identity and source of the candidates in referral for hiring. Besides, the firms failed to provide adequate information on the intended reason for making particular hires base on a personal relationship.

Based on the above code of conduct, relationship hiring practices in Barclays violated section 13(b)(2)(B) of the Security Exchange rate. The acts require the issuers to maintain a system of internal accounting tools properly to ensure that reasonable assurance has been provided. For instance, it has to prove that all transaction is performed following general authorization of the management. The tools have to indicate transactions are correctly recorded to allow the execution of financial statements. The action has to comply with standard accounting principles. The books of account must be transparent to promote the accountability of the assets. Access to inspect assets should only be allowed in compliance with general authorization of the management. Recorded accountability assets have to be compared with assets available at a given interval. Appropriate action has to be taken in cases where there is a significant difference.

Barclays was able to recognize issues related to corruption at the right time. The company also had policies and procedures that should have been used to prevent workers from using employment offers in exchange for business benefits. The bank was aware of illegal relationship hiring practices that lasted for an extended period. The bank failed to prevent and maintain an adequate system of internal accounting tools. The purpose of the control was to provide sufficient assurance that employees were not involved with unauthorized transactions. The company has designed written policies and procedures for the workers but failed to make an appropriate implementation. The case plays a significant role in this career in many ways. For instance, individuals can understand the laws and acts provided by the security exchange commission. People can comprehend provisions contained by Barclays and its role towards transparency with the Security Exchange Commission.