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