Jeffrey Epstein’s long shadow once again falls on JPMorgan and Barclays

When in doubt, when does someone cross the line of sticking their head in the sand? JPMorgan Chase and Barclays leaders must answer that question amid fresh public allegations about convicted sex offender Jeffrey Epstein and her former colleague Jes Staley.

Epstein, a client of JPMorgan for more than a decade, died in 2019 while awaiting trial on additional charges of molesting young women and girls. But ties to him still cast a long shadow over individuals ranging from tech giants to royalty. Staley, who was at times Epstein’s US bank contact, lost his job as Barclays chief executive in 2021 when he decided to contest a preliminary finding by UK regulators that he had been misleading about their relationship.

Last week, both banks were drawn further into the scandal when US Virgin Islands authorities released some emails from Staley and Epstein alleging that JPMorgan facilitated sex trafficking on Epstein’s island properties as part of a lawsuit. The US bank has called the lawsuit “baseless” and Staley, who is not a defendant, has repeatedly denied knowing about Epstein’s wrongdoing. Barclays declined to comment.

The lawsuit alleges Staley used his work email to exchange 1,200 emails with Epstein and received from the financier what the lawsuit describes as “photographs of young women in seductive poses.” It is also alleged that Epstein used JPMorgan accounts to pay more than $1 million to at least 20 sex crime victims. In 2009, Staley wrote to Epstein about their “deep” friendship and “heartfelt embrace.” A year later, he emailed, “Say hello to Snow White.” When Epstein replied, “[W]Which character do you want next?” Staley replied, “Beauty and the Beast”.

In the lawsuit, JPMorgan’s alleged response to mounting evidence of Epstein’s wrongdoing seems almost blasé. After his guilty plea in 2008, an employee speculated that his $120 million in assets would leave the bank “pending.” [CEO Jamie] Dimon Review”. But the disgraced financier remained a customer. JPMorgan said last week, “We have seen no evidence of such a review.” If Dimon hasn’t reviewed it, then who has? does anyone have The lawsuit states that when the bank later decided to question Epstein directly about the human trafficking allegations, it sent Staley.

In 2010, another email asked: “See new allegations below. . . Are you still comfortable with this client who is now a registered sex offender? The response: “These stories are popping up.” When the anti-money laundering chief requested Epstein’s formal reinstatement as a client in 2011, someone else wrote back, “I thought we did that when we took out a new $50 line of credit last month.” million dollars approved”.

JPMorgan can certainly argue that convicted felons are entitled to bank accounts and the bank cannot be expected to closely monitor every email and transaction involving a spending mogul. The bank also closed Epstein’s account in 2013, shortly after Staley left and before Epstein became the target of global outrage.

Barclays never benched Epstein, but his board is facing tough questions about his decisions in 2020 after he was arrested again. At that time, the now-public JPMorgan emails landed in the laps of UK regulators, who launched an investigation into whether Staley had misled them about the nature of the Epstein relationship.

But Barclays board insisted Staley had their “complete confidence” and stuck with him for almost another year. People familiar with the process say the board based the decision on its own investigation. It contained the emails, but not the attachments with the allegedly “seductive” images. They also considered Staley’s history of stubborn loyalty and repeated denials that he knew anything about sexual misconduct.

People are innocent until proven guilty, and criminals who have served their time deserve a second chance. But the demand for incontrovertible evidence can be a cover for willful blindness. When those involved are wealthy and connected to a network of powerful individuals, the pressure is only one-way.

JPMorgan has the form of ignoring uncomfortable facts. In 2014, it paid $2.6 billion to end a criminal investigation into allegations that it turned a blind eye to Bernard Madoff’s massive Ponzi scheme. Barclays has a history of going easy on Staley when he has crossed legal and ethical lines. The board previously stood by him when he twice attempted to uncover the identity of an anonymous whistleblower and was fined £642,430 for doing so.

Looking back is always 20/20. But it’s fair to ask whether JPMorgan’s interest in keeping Epstein’s business and the Barclays board’s trust in Staley ultimately hurt both institutions, and may continue to do so.

brooke.masters@ft.com