The Royal Bank of Canada acted in a “totally unacceptable” way when it fired a whistleblower without due process on the pretext he was too often late for work, a U.K. tribunal judge has found.
The judge said RBC shut down a whistleblower complaint of a “box-ticking culture” at the bank's operations in London in which many employees were attesting that they had read RBC policies and practices to ensure financial regulatory compliance when they had not done so.
The judge characterized a global RBC manager’s invitation to whistleblowers to step forward as “fine but empty words.”
RBC said it "strongly disagrees" with the ruling by the U.K. employment tribunal and is considering an appeal of the case in which foreign exchange dealer John Banerjee seeks £13 million ($17 million) compensation for unfair dismissal.
Banerjee’s disclosure “was clearly in the public interest,” says the May 21 ruling by Judge James Tayler. Banerjee does “bear some responsibility” because he was often late for the 7 a.m. start time at work, but it was not the primary reason, he said.
The award amount was not announced with the ruling. But the judge said RBC’s “egregious” actions warrant an increase in the award of 25 per cent, the maximum allowed for failure to comply with the U.K.’s code of conduct for handling disciplinary and grievance situations in the workplace. He noted the bank had been castigated several years ago for “unfair and brutal” firing practices after abruptly dismissing a woman without notice or appeal rights.
No fair process
Judge Tayler said RBC dismissed Banerjee “without the slightest attempt to adopt a fair process in circumstances where they have been told by the Employment Tribunal and the Employment Appeal Tribunal that to do so is totally unacceptable.”
Royal Bank of Canada #whistleblower in U.K. unfairly dismissed, employment tribunal judge rules. @RBC in UK may appeal. #banking via @NatObserver
Hired in June 2015 in London, England, to build out the bank's business in emerging market currencies, Banerjee was a successful trader, making millions for the bank. He was dismissed in August 2016.
Banerjee claimed at the hearing that he had blown the whistle on a series of concerns, including a loosely worded code of conduct for traders, a laissez-faire attitude among his colleagues towards regulatory compliance and an alleged bribe by a senior manager to cover a trading loss caused by a Hong Kong colleague’s error.
The judge rejected the bribe allegation and said the public interest disclosure that “rang alarm bells” within RBC management was that of failure by bank employees to read and understand compliance policies.
“If bankers are not reading important policies and so may breach regulatory requirements, that is of the utmost public interest,” he wrote. “The public have the greatest interest in banks avoiding a further financial crisis in which the general public would suffer, as they did in the last.”
In an emailed statement to National Observer, a spokesman for RBC in the U.K. said the bank may appeal.
“We strongly disagree with the Tribunal’s decision and are considering an appeal. RBC takes its duties as an employer very seriously and encourages a robust compliance culture, which includes promoting the freedom for employees to speak up and blow the whistle," Adam Lister, associate director of corporate communications.
"RBC is reviewing the judgment carefully to see whether there are any practical steps it should take to make improvements to any employment processes. It would be inappropriate to comment further whilst the proceedings are ongoing.”
'Bit of a blowhard'
During Banerjee's time at RBC, staff were encouraged to speak up and report wrongdoing by Jonathan Hunter, the bank's global head of fixed income, currencies and commodities. He delivered a presentation at a company town hall meeting that told staff to "challenge the status quo," and that "don't ask don't tell will not be tolerated".
After this presentation, Banerjee wrote to Hunter, detailing his concerns about the risk of non-compliance if staff did not know procedures and rules. Hunter “disingenuously” thanked Banerjee, the judge said, while he had called him “a bit of blowhard” during a meeting with senior managers.
While a number of managers led him to believe his complaint was taken seriously, Banerjee’s manager was instructed to start documenting his late attendance and the bank "shut the complaint down," without telling him and fired him, Judge Tayler concluded.
"The Claimant did ‘tell’ the bank that staff were taking a couple of minutes to attest that they had read policies vital for regulatory compliance when they had not read them carefully, or at all; and did ‘ask’ the bank to investigate," he wrote.
"The bank's actions thereafter were the opposite of their fine, but empty words. Using his late arrival at work as a pretext, the bank sacked the Claimant. The main reason for his dismissal was his public interest disclosure."
Banerjee was assisted in his suit by WhistleblowersUK, a non-profit organization that provides support and information to whistleblowers.
Judge Tayler said employers should protect whistleblowers.
“Most people choose to stay silent when something is wrong, as they want a quiet life,” he said. “Those who blow the whistle must have remarkable and, at times, exhausting determination. Employers should take that into account when looking at whistle blowing complaints and ensure that they protect genuine whistleblowers, even if they find them somewhat enervating.”
This is the latest in a series of embarrassing headlines for RBC. Last week, the bank's asset management arm, Royal Mutual Funds Inc. (RMFI), was found to have broken strict rules on commissions. RMFI was fined $1.1 million by the Ontario Securities Commission for paying its representatives more for recommending its own mutual funds over those from other providers.
Earlier this month, the bank also fired Blair Fleming, head of U.S. investment banking, for violating the company's policies about relationships with fellow employees.
RBC also paid $15.5 million to settle a foreign exchange rigging lawsuit in the U.S. last year.
Whistleblowing movement is gaining strength
The tribunal's ruling comes as whistleblowing has gained prominence worldwide. Canadian whistleblower Christopher Wylie revealed earlier this year that Cambridge Analytica hijacked millions of Facebook users’ data. The data firm played a leading role in Donald Trump's election campaign and the 'Leave Campaign' in the U.K. referendum on exiting the European Union.
Once derided as traitors and snitches, whistleblowers are a growing force to be reckoned with. Last year, Canada passed a law - the Journalistic Source Protection Act aimed at increasing protection of journalists and whistleblowers from invasive search warrants and police spying.
France, Italy, Ireland and Holland have reformed protection schemes in recent years, and the European Union is developing plans for EU-wide protection. From Australia to Nigeria, governments are beefing up laws designed to protect those who speak up.
The International Bar Association recently published best practice guidance on whistleblower protections for regulators and organizations. Virginie Rozière, member of the European Parliament and author of a proposal for EU-wide protections for whistleblowers, shared her predictions in the foreword:
"Slowly but surely, the whistleblowing revolution is gaining momentum. 2018 may well be the year of the whistleblower."