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Barclays pays SEC $6.3 million to settle ‘referral hiring’ FCPA violations

Barclays PLC paid the SEC $6.3 million Friday to settle FCPA offenses related to the hiring of relatives of public officials in Asia. 

The British bank disgorged $3.8 million and paid a $1.5 million penalty to the SEC, plus pre-judgment interest of $984,000.

In an internal administrative order (pdf), the SEC charged Barclays with violating the FCPA’s books and records and internal accounting controls provisions.

From at least 2009 until August 2013, businesses within Barclays Asia Pacific Region (APAC) hired 117 job candidates referred by or connected to foreign government officials or non-government clients. 

Some of the hires — relatives and friends of government officials and executives of Barclays’ non-government clients — were extended as a personal benefit to those officials and executives with the expectation that the bank would gain investment banking business, the SEC said. 

Barclays APAC employees also falsified records to conceal the true identity of the person or entity requesting that a candidate be hired and the reasons for the hire. 

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.

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. 

The banker also said relationship hiring decisions were made based on whether the client was important, whether the hire would enhance the business relationship, and whether hiring the candidate would “open doors” or otherwise help the bank win business.

The hiring practices began in South Korea and later expanded to other APAC countries.

APAC compliance officers were aware of the hiring practices by June 2009, the SEC said. 

Despite an April 2009 Barclays policy that expressly addressed anti-corruption risks related to hiring decisions, APAC compliance officers said they weren’t aware of that aspect of the policy, and a senior APAC compliance executive said he had never read the 2009 anti-bribery and corruption policy. 

Even with compliance reviews in 2011 and 2012, Barclays APAC continued to hire candidates connected to officials at state-owned entities or to executives of non-government clients where business was either pending or being sought. 

Another Barclays banker who worked in both South Korea and Hong Kong from June 2005 to March 2017 said he was not aware of the FCPA until 2013. 

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

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In August, Deutsche Bank paid the SEC $16 million to settle FCPA offenses related to its hiring of relatives of public officials in China and Russia. 

In mid 2018, Credit Suisse Group AG agreed to pay a $47 million penalty to the Justice Department to end an FCPA investigation into hiring practices in Asia.

In 2016, JPMorgan Chase paid $264 million in penalties for awarding jobs to relatives and friends of Chinese government officials to win banking deals. The FCPA enforcement action was brought by the DOJ, SEC, and the Federal Reserve.

In 2015, BNY Mellon paid $14.8 million to the SEC to resolve FCPA offenses for providing internships to family members of officials connected to a Middle Eastern sovereign wealth fund.

In 2016, mobile chipmaker Qualcomm Inc. paid the SEC $7.5 million to settle FCPA offenses for hiring relatives of Chinese government officials. The officials were deciding whether to select the company’s mobile technology products, the SEC said.

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Harry Cassin is the publisher and editor of the FCPA Blog.

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