Barclays chief clashes with private equity firm over family dispute
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Version 0 of 1. Barclays boss Jes Staley has incurred the wrath of one of the bank’s most powerful clients, private equity giant KKR, after backing his brother-in-law in a legal dispute with the buyout house. KKR is no longer inviting Barclays to take part in potentially lucrative deals as a result and has not ruled out making a formal complaint to the bank’s board, sources familiar with the matter told the Guardian. And the US buyout firm issued a thinly-veiled warning reminding Barclays of its “responsibilities” to clients, in a row that threatens to expose Staley to renewed accusations of allowing personal relationships to affect the bank he runs. The chief executive apologised last month after admitting that he asked Barclays’ internal security team to unmask a whistleblower, who had made accusations against an ex-colleague Staley recruited from his former employer JP Morgan. The latest dispute, revealed in the Wall Street Journal, relates to Aceco, a Brazilian technology company founded by the family of Staley’s wife Debora Nitzan Staley. She and her brother Jorge Nitzan sold their stakes in Aceco to KKR in a 2014 deal that valued the company at $700m (£542m) and is said to have made the siblings $240m between them. The deal was KKR’s maiden direct investment in Brazil but went sour in 2015 when the private equity giant fired Nitzan, then Aceco’s chief executive, and wrote off its $475m investment, after an internal investigation into a whistleblower’s allegations of fraud. KKR said the probe uncovered evidence that Aceco made payments to people involved in Brazil’s gargantuan “Car Wash” bribery and corruption scandal, some linked to the 2014 World Cup. Nitzan denied any involvement in fraud, saying KKR simply regretted an ill-fated investment made just before Brazil plunged into a deep recession. While Barclays was not part of any deals involving Aceco, Staley became involved in the row in a personal capacity after a company owned by Nitzan bought a tranche of Aceco debt. The deal could have allowed Nitzan to regain control of the company he had sold to KKR, just a few years after the American private equity group had watched its investment dwindle to nothing. A legal dispute between Nitzan and KKR ensued and, according to reports, KKR asked Staley to listen to the findings of its investigation, in the hope he would convince Nitzan to settle. The Barclays chief executive refused to do so and subsequently introduced a friend, Timothy Collins of New York firm Ripplewood Advisors, to Nitzan as a potential investor. KKR later learned that Staley had also discussed the Aceco affair with two of KKR’s co-investors in the company, the Texas Teacher Retirement System and Singapore’s sovereign wealth fund GIC, telling them he did not believe Nitzan would be involved in fraud. Alexander Navab, KKR’s private equity chief for the Americas, is understood to have called Staley to ask why he was aiding Nitzan despite serious allegations of fraud that affected KKR. Staley argued that he was acting in a personal capacity and would continue to defend his brother-in-law. But KKR dismissed the idea that he was acting privately and has accused him of acting against the interests of a Barclays client. Sources familiar with the matter said the conversations between Staley and Navab were “not friendly”. Barclays declined to comment. But KKR issued a statement saying it had a “responsibility to protect the interests of our investors who we believe were defrauded in the sale of Aceco”. “We would also note that we have been a long-time client of Barclays, which comes with its own responsibilities for Barclays,” a spokesperson added. KKR, which has paid Barclays $190m in fees since 2010 according to Dealogic, is understood to have barred Barclays from taking part in certain deals and will continue to do so until the dispute is resolved. The private equity group has also yet to rule out making a formal complaint about Staley to the Barclays board or its chairman John McFarlane. Staley is already facing a regulatory investigation, a pay cut and a potential investor revolt, after he admitted trying to unmask a whistleblower who made allegations about a long-term associate he had brought to the bank. The American twice attempted to use Barclay’s internal security team to track down the authors of two anonymous letters, which he said were an effort to “maliciously smear” Barclays executive Tim Main. The letters are understood to have contained allegations about the previous conduct of Main, who worked with Staley at US bank JP Morgan and was then recruited to Barclays in a senior role last June. |