ABUSE OF STRUCTURED FINANCIAL PRODUCTS- Misusing Basket Options to Avoid Taxes and Leverage Limits MAJORITY AND MINORITY STAFF REPORT

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as the consolidation point within the Barclays group for all funding in U.S. dollars. 132 It has
access to the discount window at the Federal Reserve Bank of New York, and it is funded
through external, unsecured financing from BPLC. 133
Sir David Walker has been the Barclays Group Chairman since 2012. 134 He was
previously the Chief Executive Officer of Morgan Stanley. 135 In addition, Antony Jenkins
replaced Bob Diamond as the bank’s Chief Executive Officer after the bank became the subject
of a number of investigations into its business practices. 136 Some of those investigations
examined the bank’s participation in tax avoidance schemes. 137 In February 2012, for example,
the U.K. Treasury stopped a “high-street bank,” understood to be Barclays, from implementing
what they called “highly abusive” tax avoidance schemes that could have resulted in the loss of
some £500 million in public revenue. 138
Salz Review. In response to the multiple investigations and negative public reaction, in
July 2012, Barclays’ leadership commissioned what it called the Salz Review, named after Sir
Anthony Salz, a prominent British solicitor who headed the effort. 139 The stated objective of the
effort was to get an independent review of Barclays’ business practices and determine “what
went wrong.” 140 The reviewers reported to a non-executive committee at Barclays. 141 The Salz
Review described the bank culture as one of “winning at all costs” and prizing the “cleverness”
of employees who took “robust positions with regulators ... [and followed] the letter rather than
the spirit of the rules.” 142 Among other findings, the Salz Review stated that “a culture
developed within Barclays, quite possibly derived originally from the investment bank, which
came across to some as being … arrogant and aggressive.” 143
The bank drew particular criticism for abusive tax structures that were deemed
“insensitive to changing political and public expectations around tax.” 144 When confronted by
regulators about tax avoidance issues, the bank’s Structured Capital Markets (SCM) Group and
the bank at large were “more willing than its peers to challenge outsiders and less willing to cede
132 Id.
133 Id.
134 “Leadership: Sir David Walker,” prepared by Barclays, http://www.barclays.com/about-barclays/leadershipteam/sir-david-walker.html.
135 Id.
136 See “Barclays to close ‘tax avoidance' unit,” BBC, (2/10/2013), http://www.bbc.com/news/business-21397844.
137 Id.
138 “Barclays £500m tax loophole closed by Treasury in rare retrospective action,” The Guardian, Jill Treanor
(2/27/2012), http://www.theguardian.com/business/2012/feb/28/treasury-closes-barclays-taxschemes?guni=Article:in%20body%20link.
139 See 4/2013 “Salz Review: An Independent Review of Barclays’ Business Practices,” prepared by Anthony Salz
et al., at 2, http://online.wsj.com/public/resources/documents/SalzReview04032013.pdf.
140 See id. at opening letter from Anthony Salz.
141 Id. at Disclaimer.
142 Id. at 82.
143 Id. at 70.
144 Id. at 74.