It is rather ironic that Barclays PLC (ADR) (NYSE:BCS) (LON:BARC) CEO Antony Jenkins, ushered in to clean up Barclays in the wake of the Libor and other market rigging scandals, finds himself in what can be considered one of the more brazen scandals involving charges of fraud in the firms history.

Antony Jenkins Barclays PLC

Barclays PLC director’s refusal to participate in a plan to falsify information

If the government’s allegations are true, consider that the firing of a company director for refusal to participate in a plan to falsify information to investors should have sent shockwaves through Barclays management. In smaller brokerage operations this would be big news and those who avoided addressing the issue might be held to regulatory account.

The division in question wasn’t just any division, but was termed as “the franchise” inside the bank. How higher level officials at Barclays PLC (ADR) (NYSE:BCS) (LON:BARC) can deny knowledge of someone at the director level being fired for refusing to participate in an alleged fraud appears more unusual. Where was the bank’s compliance department, human resources or internal auditing groups? Any one of several warning signals should have been tripped in the incident to protect what was internally referred to as “the franchise.”

Barclays did not respond to activity in the compliance structure

When contacted with specific allegations about who might have been aware of such activity in the compliance structure, Barclays PLC (ADR) (NYSE:BCS) (LON:BARC) did not respond. Previously a Barclays spokesman, Mark Lane, had said they are cooperating with investigators and examining the larger fraud matter internally.

Jenkins was brought in under the reformer label, vowing to change a bank culture that, critics charge, took advantage of a legal and investigative standard in the US and abroad that failed to hold to account – or even investigate – bank wrong doing.  When crimes are not investigated or punished for a certain class of individual, and this knowledge filters down through the financial services industry, it doesn’t take a Harvard MBA to figure out that deterrence is lost and that a crime wave is likely to follow.

Barclays PLC (ADR) (NYSE:BCS) (LON:BARC) had a history of wrongdoing, not uncommon among some of today’s larger banks. It paid a $494 million fine in 2012 for submitting false London interbank offered rates, $44 million to settle gold market manipulation claims which wasn’t to be outdone by the firm setting aside nearly capital to settle claims on questionable interest rates SWAPs and other insurance products.

When a CEO takes over a company with this background, shouldn’t awareness of potential criminal behavior – with proper compliance systems in place to keep this behavior in check – be one of the top priorities?

But in an environment where criminal deterrence is lost, which unfortunately has mostly been the case from 1998 to present, the notion that the banking class won’t be held to account apparently held sway… again.