Silence is Golden

Silence is Golden

A banker disagrees with the manner in which the bank treats his client. Can a banker go public with his objections, or should he keep these 'in house'?

On an early autumn day in September 2008, a banker's eyes drift away from his computer screen. He looks out of his rainy office window overlooking one of Amsterdam's canals. "Is this really the right thing to do?", he reflected. He had joined the bank more than seven years ago and he is about to send his last email. He pauses one last moment, then hits the send button.

The email contains the banker's resignation. He is dissatisfied with the approach taken by the bank in a dispute with one of his clients. He feels that the client has been treated unfairly. He hands in his resignation on 'moral and ethical grounds'. He sends the email to the HR department, but also directly to the client's lawyer by adding him as a recipient in the 'bcc' field of the email. The lawyer no doubt warmly welcomed this email as a cornerstone in a claim he was preparing against the bank.

The bank was less amused. The bank accepted the resignation, but it also required that the banker paid back part of the bonus that he had been awarded earlier that year. In the legal proceedings that followed, the Dutch cantonal court and the court of appeal ruled in favour of the bank. A banker is bound by a duty of loyalty and confidentiality towards his employer. Copying the lawyer of a client in internal correspondence constitutes a manifest breach of such duty. The banker could kiss his bonus goodbye.

In October 2012, the Supreme Court rendered its decision in this matter. It confirmed that as a general rule, providing confidential information to third parties such as a client or his lawyer, constitutes a breach of the duty of loyalty and confidentiality. But in this particular situation, the actions of the banker were justified. The Supreme Court considered relevant that the banker acted in the spirit of the internal compliance rules of the bank.

The internal compliance rules required that all breaches of internal rules, business principles or statutory provisions were to be reported internally to the compliance officer, which clearly the banker had not done. However, according to the Supreme Court, the purpose of these rules is to ensure that the interests of the client remain paramount to the interests of the bank. The banker was therefore allowed to share his explosive correspondence with the bank's client and his lawyer, without reporting the incident to the internal compliance officer first.

This decision is part of a trend calling for individual bankers to take on individual responsibility to 'do the right thing' or to correct undesired behaviour. Another example is the introduction of the bankers' oath earlier this year. It also demonstrates that it is becoming more difficult to keep whistleblowers 'in house', even if internal compliance rules require submitting an internal report before going public or talking to third parties. We live in interesting times .


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