Speaker 1: This is this real sense. Epstein had gone beyond being
Speaker 1: a friend. He was practically a sort of surrogate member
Speaker 1: of the Staley family to an extraordinary degree.
Speaker 2: Really, I'm Francis Laqua and I'm David Merritt, and this is.
Speaker 3: In the City, Bloomberg's podcast, connecting you to the conversations
Speaker 3: at the heart of the City of London.
Speaker 4: We're going to take a dive into one of our
Speaker 4: top stories that we have out this week that centers
Speaker 4: on the details behind the relationship between Jeffrey Epstein and
Speaker 4: former Barclay's chief executive Jess Day. And you know, there
Speaker 4: are one hundreds thousands of emails communications between the pair
Speaker 4: that the Bloomberg team have been diving into for months now,
Speaker 4: and we're really pleased to have join us in the studio.
Speaker 4: The team responsible for this investigation. We have Harry Wilson,
Speaker 4: our financial reporter who covers the ins and outs of
Speaker 4: the banking industry. Jonathan Browning, our reporter across financial crimes
Speaker 4: and the courts in London, and his counterpart with me
Speaker 4: here in New York this week, avera Benny Morrison, who
Speaker 4: is on the legal team here. Welcome more to in
Speaker 4: the City, Thanks for having us. Clearly this was a
Speaker 4: real group effort on this story. There's a huge amount
Speaker 4: of information to unpack here for a story that really
Speaker 4: does lift the lid on this relationship that's caused a
Speaker 4: huge amount of introspection both at Barclays and also JP
Speaker 4: Morgan as well. Harry, could you kick us off with
Speaker 4: how this story came about, what first prompted you to
Speaker 4: take a look at all of this information and when
Speaker 4: did you start working on it?
Speaker 1: So, I think the staly Epstein story has been gestationed
Speaker 1: for several years now. We've known that they had these contacts.
Speaker 1: Obviously it was the reason that jets Daily stepped down
Speaker 1: in the first places at Barkley's CEO, So we've known
Speaker 1: that there was this relationship. What we've got though, in
Speaker 1: the last I guess sort of six to nine months,
Speaker 1: is a really detailed picture coming through legal disclosure, whether
Speaker 1: that's from the US Virgin Islands case against JP Morgan
Speaker 1: or a separate now settled legal case Jane do One,
Speaker 1: and that has come with it thousands of pages of
Speaker 1: legal documentation, which really has kind of given us an
Speaker 1: unprecedented insight into into relationship. Know how it worked on
Speaker 1: a daily basis, and you really get the kind of
Speaker 1: sense of the debt for friendship that had developed between
Speaker 1: Jess Stately and Jeffrey Epstein. And I guess when we
Speaker 1: started seeing just how much was coming out, that kind
Speaker 1: of came a point where we thought, well, we've really
Speaker 1: got to start putting all this stuff together and trying
Speaker 1: to join up the dots and see what the picture
Speaker 1: looks like when you take a sort of step back
Speaker 1: and look at it, not just on the sort of
Speaker 1: you know, that day's particular headline, but what it looked
Speaker 1: like in the round.
Speaker 3: Jonathan, we're four years on after Epstein's death in prison
Speaker 3: by suicide. It's amazing that it's taken this long to
Speaker 3: have all of the emails. This is because there are
Speaker 3: new probes or a new lawsuits.
Speaker 5: Yeah, it's the US litigation that has been instrumental in
Speaker 5: uncovering all these emails between the There is a separate
Speaker 5: UK investigation that is being conducted by the Financial Conduct
Speaker 5: Authority that's into whether or not just Daily misled the
Speaker 5: board about this very issue about the relationship that he
Speaker 5: had with Epstein, and we are waiting for the results
Speaker 5: of that. But that has been a entirely kind of
Speaker 5: confidential prob We've learned nothing from the FCA. We're still
Speaker 5: waiting for that decision to come through. It's the disclosure
Speaker 5: process in the US that has been so valuable and
Speaker 5: has been so revealing about the way that these two
Speaker 5: incredibly powerful men essentially boosted each other the whole way
Speaker 5: through their career AVA.
Speaker 4: So it was the US case that first of all
Speaker 4: shone a light on these emails, talk us through the
Speaker 4: process of going through all of this communications and how
Speaker 4: you piece together the story from the disclosures from the court.
Speaker 6: It felt like every single day there were some new
Speaker 6: disclosures or emails between Epstein and Study that were being
Speaker 6: unredo acted as part of these two court cases.
Speaker 4: So it wasn't order one go. It was a kind
Speaker 4: of slow drip drip of all of these communications.
Speaker 6: Yes, exactly. It's been a drip drip since both the
Speaker 6: cases were filed separately at the end of last year,
Speaker 6: and it's been very piecemeal, bit by bit looking at
Speaker 6: some revelation and a new email that sheds light on
Speaker 6: the depth of their friendship. So it was really helpful
Speaker 6: to take a step back and enlightening I guess for
Speaker 6: Harry to put together this timeline of all of the
Speaker 6: emails and correspondence between the men in correlation with different
Speaker 6: events that were happening, like Jeffrey Epstein being convicted of
Speaker 6: listening a mind of a prostitution in Florida, and what
Speaker 6: kind of conversations the pair were having at that time
Speaker 6: and what was going on inside the bank.
Speaker 4: Were you shocked by what you read?
Speaker 6: Yes, some of the emails and the conversations that were
Speaker 6: happening between the two shocking a because it was on
Speaker 6: jess Day's work email, which sort of beggars belief and
Speaker 6: be the contents of it, suggestion about women, apparent references
Speaker 6: to beauty and the Beast and snow white which is
Speaker 6: alleged to be about different women that maybe they had
Speaker 6: seen the weekend before. So that kind of communication and
Speaker 6: that correspondence was quite a suppose shocking.
Speaker 3: Toad and Jonathan, you say, Bay said, the relationship between
Speaker 3: Stale and Epstein beyond that of banker and client. What
Speaker 3: do we actually know?
Speaker 5: Well, I think we've discovered and within kind of Harry's
Speaker 5: timeline was the way in which they were, in one
Speaker 5: sense quite reliant upon each other. That there are repeated
Speaker 5: and regular instances where Jeffrey Epstein is kind of involved
Speaker 5: in the JP Morgan strategy in that JP Morgan kind
Speaker 5: of plans for big deals, perhaps with Bill Gates, for instance,
Speaker 5: and he's putting kind of Jess Daily forward all the time.
Speaker 5: And we can see the whole way through the timeline
Speaker 5: this sort of regular intervention from Epstein to kind of
Speaker 5: push Jess Daily fear forward. And it's mutually beneficial because
Speaker 5: on the other side of the coin we have the
Speaker 5: disclosure where we can see Epstein being kind of supported
Speaker 5: and protected by Jess.
Speaker 1: Stay.
Speaker 4: Give us a little bit more of the color of
Speaker 4: this sort of mutual support network, Jonathan. So there were
Speaker 4: you know, stays in Caribbean islands, there was promotion of
Speaker 4: each other's work. So tell us how exactly all the
Speaker 4: sort of backslapping manifested itself.
Speaker 5: The two are obviously very close personally to each other.
Speaker 5: Even after Epstein was jailed in Florida in June two
Speaker 5: thousand and eight, less than a fortnight later, Staley writes
Speaker 5: to him, going, I miss you. The world is a
Speaker 5: tough place hanging there. Just a few days later, he's
Speaker 5: asking for epstein advice on his pay negotiations with Diamond and.
Speaker 4: So sorry this is and this is our So Epstein
Speaker 4: has been convicted at this point and Jess Staley asks
Speaker 4: him for some tips on how to negotiate his salary.
Speaker 5: Epstein replies, do not give in. I'll try to call
Speaker 5: you later. And how much was it he was asking
Speaker 5: for the discussion? Goes tell him, which is Diamond a
Speaker 5: one million dollar increase to twenty five million dollars.
Speaker 4: So these are numbers, obviously that are beyond the imagination
Speaker 4: of most people. And one of the real shocking things
Speaker 4: for the public I think in the whole Epstein scandal
Speaker 4: was the way in which the establishment or establishment figures
Speaker 4: like Jess Staley and of course we talked about Britain
Speaker 4: around people like Prince Andrew, continued to communicate despite his
Speaker 4: convictions and despite the things that he had been proved
Speaker 4: guilty of doing. EVA. As you went through these emails
Speaker 4: and you see the timeline that you've referenced on here,
Speaker 4: what were some of the more surprising things that these
Speaker 4: men continued to discuss despite what he had been convicted of.
Speaker 6: I think exactly what Jonathan was saying, the fact that
Speaker 6: Staley kept going back to him for advice on different things,
Speaker 6: pay negotiations, and Epstein was organized meetings with politicians global
Speaker 6: figures as well for Staley to meet all around the world.
Speaker 6: And Staley as well went to him for advice about
Speaker 6: his daughter's career and for help to actually get her
Speaker 6: into a course at Columbia University in New York. So
Speaker 6: there was that mutually beneficial professional relationship. But I think Staley,
Speaker 6: based on the emails and the cland of language he
Speaker 6: was using, really saw Epstein as a true friend. And
Speaker 6: when he was released from prison in Florida in and eight,
Speaker 6: two thousand and nine, in one of the emails, he
Speaker 6: talks about how nice it was to be able to
Speaker 6: see his friend in New York again and give him
Speaker 6: a long hug. So that sort of illustrates how deep
Speaker 6: the friendship was as much as it was a professional
Speaker 6: relationship as well.
Speaker 4: So as you read these emails, the extent of this
Speaker 4: friendship seems much deeper than everyone thought.
Speaker 1: I think one episode really sticks in my mind, which
Speaker 1: is a March fifth, twenty eleven emails. So this is
Speaker 1: right about the time when the banks in deep discussions
Speaker 1: about whether Epstein should remain a client to the bank.
Speaker 1: Compliance clearly wants him out. Management will clearly want him out,
Speaker 1: but Stay remains as resolutely loyal to him as ever,
Speaker 1: and he also starts to talk about just how important
Speaker 1: he is, and so he writes Debbie, this is his wife, Deborah.
Speaker 1: Debbie and I were talking tonight about what you've meant
Speaker 1: to me and Alexa, Alexa being his daughter. You have
Speaker 1: paid a price for what has been accused, but we
Speaker 1: know what you have done for us, and we count
Speaker 1: you as one of our deepest friends and most honest
Speaker 1: of people. And Epstein then just replies with a single
Speaker 1: word family. And this actually this work family gets used
Speaker 1: time and again in emails.
Speaker 3: What are the actual accusations here? I mean, this is
Speaker 3: not only allegedly just Daily keeping him as a client
Speaker 3: when he probably shouldn't have. There are darker aspects to
Speaker 3: this relationship.
Speaker 1: Yes, So one of the sort more disturbing aspects of
Speaker 1: the case are the allegations that just Daily wasn't just
Speaker 1: a sort of passive witness of these things, but was
Speaker 1: actually himself and assailant in one of these allegations. Now,
Speaker 1: obviously he has denied these allegations, but that is actually
Speaker 1: part of what forms say JP Morgan case against him,
Speaker 1: which at the moment obviously that's the only thing that
Speaker 1: we see. But JP Morgan are also going after records
Speaker 1: related to the US law enforcement records related to some
Speaker 1: of these aspects, and I guess could be particularly difficult
Speaker 1: for him, particularly given the size of the potential JP
Speaker 1: Morgan claim against him. So figures have been bandied around
Speaker 1: in the tens of millions, but JP Morgan could clearly
Speaker 1: go after him for damages as well as compensation, which
Speaker 1: could be incredibly expensive.
Speaker 6: One of the key legal questions in the litigation over
Speaker 6: here when it comes to Jess Dailey, was he acting
Speaker 6: within the scope of his role. And an argument that
Speaker 6: he could make people who work in similar positions could
Speaker 6: make is he's in the business of managing relationships and
Speaker 6: bringing business to the bank, and he's certainly outlined in
Speaker 6: some arguments that he was acting within the scope of
Speaker 6: his employment. JP Morgan though, has a que him of
Speaker 6: being involved in sexual misconduct, which Daily strenuously denies. So
Speaker 6: they're arguing that, well, that's definitely not within the scope
Speaker 6: of your job role. But I think a lot of
Speaker 6: people are looking at some of the allegations that are
Speaker 6: coming out about just Daily in the way that he
Speaker 6: was presenting himself and communicating with Epstein and asking questions
Speaker 6: about well, what is the definition of that job? And
Speaker 6: can we land in hot water for how we're dealing
Speaker 6: with our clients as well.
Speaker 3: So, Harry, when you look at this, where are the
Speaker 3: compliance officers of JP Morgan?
Speaker 1: So I think this is quite interesting thing. So one
Speaker 1: of the key moments that we picked out in this
Speaker 1: story is January of twenty eleven, and at this point
Speaker 1: you have this sort of extraordinary sort of confluence of events.
Speaker 1: So for when you have just Daily that month actually
Speaker 1: goes and visits on his yacht, he sales to Epstein's island, well,
Speaker 1: while Epstein apparently isn't there. But at the same time
Speaker 1: Epstein is also trying to set up a meeting with
Speaker 1: him with Bill Gates, which is not clear if that
Speaker 1: actually took place. And then Ekrey also is as over
Speaker 1: pred mentioned, at this time, Epstein is appearing to help
Speaker 1: Stay's daughter into Columbia University, into an elite program. And
Speaker 1: right at the moment this is happening, in the backdrop,
Speaker 1: you've got compliance who are basically saying we want this
Speaker 1: guy out to the bank. So on the one hand
Speaker 1: you have these incredibly close contacts between Jess Dally and Epstein,
Speaker 1: but also he's also there as a kind of arbiter
Speaker 1: on whether Epstein can remain a client to the bank,
Speaker 1: and now the bank itself. At that point, you've got
Speaker 1: emails suggesting that the head of the private bank actually
Speaker 1: wanted him gone. You've got compliance effectively saying we don't
Speaker 1: think having this guy is a good idea. And this
Speaker 1: is January twenty eleven. I should add Epstein actually leaves
Speaker 1: the bank in July twenty thirteen, so two and a
Speaker 1: half years later before he actually goes, and it's very
Speaker 1: clear from a lot of his emails that the only
Speaker 1: reason that he remains a client to the bank, at
Speaker 1: least this is the opinion of staff at the time,
Speaker 1: is that it's jets Stay's relationship with Epstein that basically
Speaker 1: saved him.
Speaker 4: And of course, after all of this, Harry he's hired
Speaker 4: as chief executive of Barclay's, one of the most prestigious
Speaker 4: jobs in banking in the UK. How is someone with
Speaker 4: this relationship that has been analyzed by JP Morgan, how
Speaker 4: they able to walk into that sort of job.
Speaker 1: I don't think that the relationship has really been looked
Speaker 1: at at that point. You know, there've been kind of
Speaker 1: odd sort of stirrings here and there that the two
Speaker 1: were very close in this sort of thing, but it
Speaker 1: wasn't actually a well known thing. I guess in the
Speaker 1: world of finance. It might well have been very well
Speaker 1: known at least among some people in cy Jping Morgan,
Speaker 1: but it hadn't actually got out into the sort of
Speaker 1: the wider world. And it's only now that with hindsight
Speaker 1: we can see just how close they were and how
Speaker 1: obvious it is that they had this tight bond. But
Speaker 1: at the time it was I guess it was hearsay speculation.
Speaker 1: You know, there wasn't really much to it. There was
Speaker 1: the odd stories that came out, but there wasn't really
Speaker 1: anything substantive.
Speaker 5: One of the things that happened kind of when Staley
Speaker 5: was hired is that Diamond says in his deposition for
Speaker 5: this case that he was asked by the Barclays chairman
Speaker 5: whether there was anything he ought to know about Jess
Speaker 5: Staley before he hired him, and he said no. Diamond said, now,
Speaker 5: with that hindsight, he'd have given an entirely different answer.
Speaker 3: I guess part of it is also confidentiality. So if
Speaker 3: you look at the scheduled meetings, I think between over
Speaker 3: a seven year period, right this is from two thousand
Speaker 3: and nine twenty fifteen, or about sixty scheduled meetings. We
Speaker 3: don't know how many of them actually took place, but
Speaker 3: is that unusual for, you know, a big client of.
Speaker 5: The bank, for someone in Staley's position at the time.
Speaker 5: I think that number of meetings goes above and beyond
Speaker 5: what one would expect. Even in the final year at
Speaker 5: the bank, he had fourteen scheduled meetings just in twenty twelve.
Speaker 1: I supposed to point to make there as well. Was
Speaker 1: he at that point he had no dealings with the
Speaker 1: asset Meagement private bank. You know, he'd been promoted to
Speaker 1: the chiefs of J. P. Morgan's investment bank in twenty ten,
Speaker 1: so he was well out of the sort of management
Speaker 1: reabit where he might have needed to know the clients.
Speaker 1: This was obviously something he chose to do.
Speaker 3: Do we know if jess Day was the only executive
Speaker 3: Jeffrey Epstein was emailing.
Speaker 1: With, so we know that he was also emailing with
Speaker 1: Mary Urdos, who remains at JP Morgan. She's the chief
Speaker 1: executive of their global asset management arm, and that the
Speaker 1: two of them, the communications there are an't as frequent
Speaker 1: or quite as warm as between Staley and Epstein, but
Speaker 1: were a fair few of them, and quite a few
Speaker 1: of them were quite friendly. So there's been open questions
Speaker 1: there about what her own role in this has been.
Speaker 1: Again we should say that obviously J P. Morgan themselves
Speaker 1: have played down the links there and said that her
Speaker 1: behavior at all times was above board. But clearly, obviously
Speaker 1: as more information comes to light, the picture is developing,
Speaker 1: and this is very much a it still looks like
Speaker 1: a developing picture.
Speaker 3: How much business was Ebstein bringing two to JP Morgan
Speaker 3: is It difficult to have a number.
Speaker 1: On that, guess a rough idea. So he had several
Speaker 1: hundred million dollars worth of assets with the firm, and
Speaker 1: it looks like he'd been a customer of the bank,
Speaker 1: perhaps since around the early nineteen nineties. So in that sense,
Speaker 1: you know a customer that's got, say argument's sake, at
Speaker 1: least two three hundred million dollars in the bank would
Speaker 1: have constituted a very significant customer of the bank and
Speaker 1: obviously that would probably be generate a substantial amount of revenue.
Speaker 1: And that's before, obviously you get into all the other
Speaker 1: various ties and things that he might or might not
Speaker 1: have been doing for the bank over that period.
Speaker 6: For example, he was also involved in introducing JP Morgan
Speaker 6: to some of the figures at Highbridge Capital in the
Speaker 6: US here and JP Morgan ended up with a stake
Speaker 6: in that fund as well. So there was the introductions
Speaker 6: side of it as well, or the people that Epstein
Speaker 6: was introducing to JP Morgan and just daily in particular,
Speaker 6: if it.
Speaker 4: Took us through what happens next with this case? What
Speaker 4: sort of timeline are we seeing and how do you
Speaker 4: see things progressing from here?
Speaker 6: The cases has settled. That was the case brought by
Speaker 6: a victim of Jeffrey Epstein, j DO one. She reached
Speaker 6: a settlement with JP Morgan for two hundred and ninety
Speaker 6: million dollars several weeks ago. Now there's just one outstanding
Speaker 6: case left the US Virgin Islands. Jeffrey Epstein had a
Speaker 6: private island in the US Virgin Islands and that's where
Speaker 6: Staley went on his yacht. As Harry mentioned earlier, the
Speaker 6: bank and the territory are still litigating that the bank
Speaker 6: has taken a bit of a harder stance with the
Speaker 6: US Virgin Island's case, saying you're essentially being a bit
Speaker 6: hypocritical here because you allowed him to live there with
Speaker 6: three hundred million dollars in tax breaks and lacks sex
Speaker 6: offender monitoring. So I think that they will fight that
Speaker 6: a little bit harder. We're just going to wait and
Speaker 6: see how that pans out in court.
Speaker 4: And Jonathan, in terms of the FCA investigation, that is
Speaker 4: still pending.
Speaker 5: Right it's still pending. There were initial findings that we
Speaker 5: know of that seemed to imply that the FAA had
Speaker 5: at least come down on the position that there had
Speaker 5: been some mischaracterization of the relationship, that Staley had indicated
Speaker 5: his intention to fight that he had a process that
Speaker 5: went through the FCA, and then there's the question mark
Speaker 5: about whether it goes to the Upper Tribunal, and that
Speaker 5: might be a moment when it kind of comes out
Speaker 5: into the public domain into the UK as well.
Speaker 4: Taking a step back from the situation through all the
Speaker 4: banks and as Franci mentioned earlier, the regulators, what lessons
Speaker 4: are financial institutions taking from this I mean, as ever
Speaker 4: you said it was astonishing that jess Stalia was putting
Speaker 4: these emails on his work email account. What are going
Speaker 4: to be the changes the bank's put in place on
Speaker 4: the back of all of this or of these revelations.
Speaker 4: I think one of the things that comes out of
Speaker 4: it is the lack of knowledge about who exactly was
Speaker 4: in charge here, because what you've got is Compliance wanted
Speaker 4: out of the bank, You've got the management of the
Speaker 4: private bank that wants him out, and then you have
Speaker 4: this kind of unofficial role that Staley is playing because
Speaker 4: at this point he's not actually within the private bank
Speaker 4: outt management, and it's unclear who really was the final
Speaker 4: arbiter in these things. This has been a matter that's
Speaker 4: debated in several of the depositions about who exactly would
Speaker 4: have had the power to have turfed Epstein out of
Speaker 4: the bank. And I think if there's one sort of
Speaker 4: lesson coming out of this loud and clear, is that
Speaker 4: banks must have some kind of much clearer chain of
Speaker 4: command in terms of who is actually responsible for these decisions,
Speaker 4: and obviously making sure that whoever that person is responsible
Speaker 4: for that decision isn't themselves compromised in some way due
Speaker 4: to their own closeness to the client in question.
Speaker 5: The other thing is that yet again it's a case
Speaker 5: of non potentially of non financial misconduct. And for the FCA,
Speaker 5: for the regulator here, it's in London, it's getting those
Speaker 5: very questions with chrispinode and at this very moment as
Speaker 5: to the extent of its supervision of his firm, of
Speaker 5: the firm that bought Chrispinodi's name, and it's in a
Speaker 5: very difficult position. It has a very very difficult position
Speaker 5: sort of responsibility to ensure an investigation is fair. But
Speaker 5: it's yet another example of a regulator kind of battling
Speaker 5: with what to do with culture and non financial misconduct.
Speaker 4: Thank you, thanks, thanks for listening to this week's in
Speaker 4: the City. We'll be back next week.
Speaker 3: But in the meantime, if you like our show, please
Speaker 3: head on Overtaple Podcasts or wherever you listen to podcasts
Speaker 3: and rate, review and subscribe.
Speaker 4: This episode was hosted by Me David Merritt and me
Speaker 4: Franci Laqua. It was produced by Samasardi and Stacey Wong.
Speaker 3: Additional editing by Blake Naples
Speaker 4: And special thanks to Harry Wilson, Jonathan Browning and Ava
Speaker 4: Benny Morrison